From Our “Ask a Question” mailbag: Is Life Insurance a Probate Asset?
“My father died recently, and I am the executor. I will file his Will next week. But my siblings have already contacted the life insurance company to collect the life insurance. Is life insurance a probate asset or not? Can they receive the life insurance before I file the Will?”
Is Life Insurance a Probate Asset, or Not?
If a life insurance policy names an actual beneficiary, then the proceeds are considered a “non-probate” asset. A non-probate asset passes to the designated beneficiary no matter what the Will says. The Will controls who inherits “probate” assets.
Collecting Life Insurance Before Filing The Will Is Permissible.
The executor’s job is to collect all the probate assets. Typical probate assets include land, automobiles, bank accounts, and businesses. Typically the administrator receives these items. The executor pays the bills and then distributes them to beneficiaries named in the Will. Non-probate assets include IRAs and life insurance. These non-probate assets usually name beneficiaries.
To learn more about the probate process, visit my website.
The Executor Has No Power Over Non-Probate Assets, But May Be Responsible for paying The Resulting Inheritance Or Estate Tax.
Your siblings are free to contact the life insurance company at any time to collect life insurance naming them as beneficiary. Whether you file the Will or not, it does not affect their rights. These non-probate assets are still subject to any applicable Inheritance or Estate taxes.
Further, review the Will to determine who is responsible for taxes. You, as executor, may have to use the probate assets to pay the death taxes due on non-probate assets. The deceased should have made clear in the Will who is writing that check. If you need assistance in interpreting the Will, feel free to contact me.
Contact our office for a free consultation if you have further questions about probate or non-probate assets, or any other Estate Administration questions.
Wills, Trusts, Probate, and Estate Litigation It’s All We Do!
Author, Peter Klenk, Esq. LL.M.