Does a Life Insurance Policy Go Through Probate?

A life insurance policy can be a valuable estate planning tool to help cover end-of-life expenses or provide an inheritance to beneficiaries. The death benefit payout can bypass probate if the policy is properly managed. The probate process can be costly, contentious, and public, so it’s important for both policyholders and beneficiaries to understand when life insurance goes through probate to avoid delays and complications.

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Key Takeaways

Typically, as long as your named beneficiaries are available to receive a death benefit, life insurance proceeds won’t go through probate.¹
There are some instances in which a policy does go through probate, such as if the beneficiary is a minor or there is a contested claim.
Aflac’s whole life insurance and term life insurance policies for individuals and families can support your estate planning goals.

Do life insurance proceeds go through probate?

Life insurance proceeds typically do not go through probate. If a valid, living beneficiary is named on the policy and available to receive the death benefit, they should receive the benefit directly. The designation of a beneficiary legally separates the policy from the estate, bypassing the need for probate court. However, this is not exclusively the case, and there are exceptions when a policy may have to go through probate.

When does life insurance go through probate?

There are several instances in which life insurance policies may have to be settled in probate court:¹

No named beneficiaries

If you haven’t named a beneficiary on a life insurance policy, it will go to probate for the court to determine the rightful recipient of the death benefit.

Deceased beneficiaries

One of the most common mistakes with life insurance policies is not keeping them updated. If a spouse or child was named as the policy’s beneficiary but passed before you, the policy will go to probate.

Your beneficiary is a minor

Beneficiaries must be over the age of 18 to receive a death benefit.² If they’re not, the court will appoint a manager for the funds until the child comes of age.

Your named beneficiary is your estate

You may choose to have a death benefit paid to your estate, adding to the assets and liabilities to be settled upon your death. You might do this if you want the death benefit to go toward settling debts that may impact your beneficiaries’ inheritance. If you haven’t established a trust to avoid probate, the death benefit will become one more asset for the court to settle.

Contested claims

Inheritances may sometimes lead to family disputes. Your will and your life insurance policy are distinct documents, and just because you change beneficiaries in your will, it does not update your life insurance.¹ For example, if you say in a will that you want everything to go to your son, that does not change your spouse as the named life insurance policy beneficiary. Inconsistencies like this can lead to contested claims, which could force the policy into probate.

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How probate can affect life insurance payouts

Avoiding probate is one of the key benefits of a properly managed life insurance policy. It’s important to keep the policy out of court because there may be several negative consequences, including:

Delays in life insurance payouts
Reduced benefits due to creditor claims
Significant legal or administrative costs

If you avoid probate, you can ensure more of the death benefit goes to your beneficiaries and save them time and money.

How to ensure your life insurance avoids probate

Fortunately, it’s easy to ensure your life insurance policy does not go to probate. Here are a few practical steps to take:

Name primary and contingent beneficiaries: Naming both will ensure there’s a backup beneficiary in case the primary beneficiary passes away and you forget to update the policy.
Update your policy regularly: After any major event, like weddings or funerals, remember to review your policy to make sure it’s up to date and reflects your present wishes.
Consider setting up a trust: Trusts can help you avoid probate, so naming the trust as a beneficiary and stipulating how you’d like the death benefit to be distributed can provide an extra layer of protection.³

Learn more about life insurance

Life insurance can be a valuable tool to help provide your family with additional financial support after you pass. A properly managed policy can bypass probate and ensure that your beneficiaries receive their designated death benefit promptly. Aflac whole and term life insurance policies can help support your estate planning goals and provide added peace of mind. Chat with an agent to learn more about our life insurance policies and get a quote today.

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