Probate and Life Insurance, How Do They Relate to One Another?

One of the most common questions we get at Doane & Doane, PA is “does life insurance go through probate?” The short answer to that question is “no . . . in most cases.” Indeed, even though a life insurance pay-out is normally separate from probate assets, there is some gray area with regard to the relationship between probate assets and life insurance proceeds.

Accordingly, in this article, we will give a detailed answer to the question “does life insurance go through probate?”  We will cover when the two are very different, and when life insurance could go through probate in certain circumstances.

If, after reading this article, you want to make sure that you have planned properly for your own estate, then we welcome you to give us a call at Doane & Doane, PA.  Our firm focuses on probate, estate, and tax matters. We care deeply about people who are dealing with the emotional task of handling the death of a loved one, or who are planning properly so their family is taken care of in case of a tragedy.   

At Doane & Doane, PA, we strive to give our clients the personalized legal counsel they need to appropriately take care of many major life and death decisions. Contact us at Doane & Doane, PA for estate planning advice and services .  You can contact us today at 561-656-0200 or fill out our online contact form . 

As noted, the answer to the question of “does life insurance go through probate?” is normally “no.”  Why is that?  

That is because life insurance proceeds are not part of a decedent’s estate . As you likely know, the probate process is when the court takes a look at all of the assets someone has at death (i.e., their estate) and makes determinations as to 

1. How the estate will be distributed based on what is stated in the decedent’s will,
2. Whether the decedent has a valid will in the first place, and
3. Whether there are creditors making claims to the estate who must be satisfied before assets can be distributed to beneficiaries.

The money that is sitting in a life insurance policy, however, is not part of the decedent’s assets and therefore is not dealt with in probate.  

It is because the decedent – the person who took out the insurance policy on their life – never has possession of the insurance money. A life insurance policy is a creature of contract. The person taking out the life insurance policy makes an agreement with the life insurance company. The insured agrees to pay premiums, and the company, in turn, agrees to pay a set sum of money to a beneficiary when the insured passes away.  

Thus, the money that will eventually be paid to the beneficiary upon the death of the insured is never in the insured’s possession. Rather, it is just money that is promised to another person when the insured dies.  

Accordingly, that is why insurance proceeds typically do not go through probate.  

If you are a person designated as a beneficiary of a person’s life insurance policy, then you are very happy that life insurance does not go through probate. That is because the probate process is long, frustrating, expensive, and unpredictable. In fact, for those planning their estates and beneficiaries alike, the less that needs to go through probate, the better because the process is so onerous.

Thus, as a beneficiary of a life insurance policy, the moment the insured passes away, you have a claim to the life insurance proceeds without the need to worry about probate at all.  

There are two specific scenarios when a life insurance policy will end up going through the probate process.  

First, if the beneficiary of a life insurance policy dies before the insured dies. Then, when the insured ultimately passes, the life insurance proceeds will be paid out to the decedent’s estate. At that point, the life insurance money is now mixed with the rest of the decedent’s estate assets.

Second, if you take out a life insurance policy, and you make it payable to “your estate,” then when you pass away, the life insurance contract will operate as instructed, and the life insurance money will go into your estate.

In those two limited scenarios, life insurance money would need to go through probate.  

Founded in 2003 by husband and wife legal team, Randell C. Doane and Rebecca G. Doane , Doane & Doane provides legal and financial services to families, individuals, and businesses throughout Southeast Florida.

Estate planning is about much more than just giving away property. It is an act of love and kindness, with the ultimate goal of providing for the future financial security of your loved one. At Doane & Doane, our Wills and Trusts Attorneys West Palm Beach help people plan for retirement, make provisions for loved ones, figure out future child support, and minimize tax liability. Experienced wills and trusts attorneys know which tools to use to get the best results for their clients. Our lawyers can help you determine which tools are best suited to your specific circumstances.

When it comes to probate matters, such as the formal administration of an estate, Florida fiduciaries seek the assistance of the attorneys at Doane & Doane, P.A. to administer and manage their trusts and estates. Notably, the founding partners of Doane & Doane are board-certified West Palm Beach Probate Attorneys . With the additional advantage of certified public accountancy in their backgrounds, they present a unique combination of skills and experience which enables them to effectively settle, administer, and manage clients’ trust and estates.

Call us at Doane & Doane, P.A. to help you if you are faced with a probate matter, or if you would like estate planning services in Florida. You can reach us at 561-656-0200. Call us today.