As a probate and estate attorney, I’m often asked whether life insurance goes through or is subject to probate. The answer is usually “no.” Life insurance is one of those assets that does not normally go through probate. This is due to the fact that the policy names a beneficiary. As a result, at the death of the insured, the death benefits are paid to the beneficiary directly, not to the estate.
Although this is the usual handling of life insurance, as with most things in the law, there are exceptions. The main exception is where the policy either designates no beneficiary or it designates someone who predeceases the insured. Most life insurance policies only pay to the beneficiary if the benficiary survives the person whose life is insured.
Take for example a situation where there is a life insurance policy which names “John Doe” as beneficiary. If John Doe dies before the insured, then the policy will be paid to the next–or contingent–beneficiary if there is one. If there’s not a contingent beneficiary, the policy will usually provide that it will be paid to the insured’s estate. If this happens, then the life insurance proceeds are probated along with other estate assets.
One of the lessons this teaches is that it is vitally important to make sure that your life insurance is up-to-date in naming a primary and contingent beneficiary. By doing this, life insurance proceeds will not be brought into in the “probate” process. This means less time and expense in dealing with this particular asset.