Do Life Insurance Policies Go Through Probate?
Many people want to ensure that, if they die suddenly, their loved ones are protected and stable. One way a person can give their family extra financial protection if they die is by establishing a life insurance policy. A life insurance policyholder makes regular payments to the insurance company. In return, the insurance company agrees to pay a certain amount to the beneficiary or beneficiaries named under the policy after the policyholder dies. Life insurance can help surviving loved ones with financial struggles after the policyholder dies. Therefore, it is crucial that beneficiaries get the full payout after a life insurance policyholder dies. Fortunately, if a life insurance policy is up to date, it does not have to go through probate. In a case where a policy is up to date, the payout goes directly to the beneficiary or beneficiaries. However, if a life insurance policy is not up to date, it will need to be probated. Below, we discuss in detail when a life insurance policy does not have to be probated and when it may need to be.
When a Life Insurance Policy Does Not Have To Go Through Probate and When It May Need To Go Through Probate
As mentioned already, if a life insurance policy is up to date, it does not have to be probated. But what exactly does this mean? An up-to-date life insurance policy is one where there is a beneficiary or beneficiaries listed on the policy. It is one where the beneficiary or beneficiaries listed on the policy are alive and can be located. If the beneficiary or beneficiaries listed on the life insurance policy are alive and can be located, the policy does not have to go through probate. In such a case, money paid out from the policy can be accessed quickly by the beneficiary or beneficiaries.
If a life insurance policy is not up to date, or in other words, if there is no beneficiary listed on it, the listed beneficiary or beneficiaries are dead, or the beneficiary or beneficiaries cannot be located, the policy must be probated. If a life insurance policy is not up to date, it is considered part of the decedent’s estate and must go through probate. The policy must go through probate so the court can determine who is legally allowed to collect the payout.
Some Challenges That Arise When a Life Insurance Policy Goes Through Probate
There will be administrative headaches if a life insurance policy goes through probate. On top of that, the policy will most likely be used to pay debts or estate taxes. During probate, debts and taxes take priority over the distribution of assets. Therefore, if a life insurance policy is probated and there are debts and taxes to be paid, it may be used to pay the debts and taxes before the remaining money can be distributed to anyone.
Contact the Probate Guy for Legal Help
If you recently lost a loved one, and need help navigating the complex California probate process, contact the dedicated California probate attorney, Robert L. Cohen – The Probate Guy – today to schedule a telephonic consultation.
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