Do Life Insurance Proceeds Go Through the Probate Process?
In most circumstances, life insurance payouts do not go through probate. As long as you have your beneficiary designations in order, there should not be any issue with your chosen beneficiaries getting the money they are owed after you pass.
However, you may need to conduct some extra planning if you will potentially owe estate taxes or if there’s any possibility your beneficiary will not survive you.
There are some exceptions
There are some relatively uncommon cases in which life insurance payouts do end up going through probate. For example, if no beneficiary is named for the policy or if none of the beneficiaries are alive, the policy will go through probate and the court will determine the rightful beneficiary.
In such a case, the insurance company will write a check to the probate court, which then deducts probate and attorney fees from that money and pays out the balance either according to the will of the deceased or in accordance with Florida’s intestate succession laws. Also, if this happens, the insurance proceeds could also be used to pay your final debts and taxes instead of going entirely to your beneficiaries.
This is why it’s so important to name alternate beneficiaries in addition to a primary beneficiary. In case something happens to your primary beneficiary and you do not have the chance to change your beneficiary designation, you need to have a backup plan so that you maintain control over what happens to your life insurance money.
Keep in mind that you cannot change a beneficiary designation in your will. You must contact the insurance company to change the beneficiary in your insurance documentation.
For further guidance on how to handle life insurance policies in your estate plan, work with a knowledgeable Florida estate planning attorney at BaumannKangas Estate Law.