Are Life Insurance Proceeds Assets in Probate?
Key Takeaway: In most cases, life insurance proceeds are not probate assets. They are paid directly to beneficiaries by contract, bypassing the court entirely. However, specific mistakes can drag these funds back into a lengthy probate process.
When Life Insurance Bypasses Probate
Unless payable to your estate, death benefits are not considered “estate assets.” Because they are not part of the probate estate:
- They do not pass under your Will.
- They are not controlled by the probate court.
- They are usually available to beneficiaries within weeks, rather than months.
Why? When you die, the payout is legally considered the insurance company’s money, which it is contractually required to pay to your named beneficiary.
Why Your Will Doesn’t Control Life Insurance
A common misconception is that a Will is the “final word.” In reality, beneficiary designations override your Will. > Example: If your Will says your daughter gets everything, but your life insurance still lists an ex-spouse, the insurance company must pay the ex-spouse.
Warning: When Life Insurance DOES Become a Probate Asset
Your life insurance payout will likely end up in probate court if:
- The Estate is the Beneficiary: You intentionally (or accidentally) named “The Estate of [Your Name]” as the beneficiary.
- Lapsed Beneficiaries: Your named beneficiary died before you, and no contingent beneficiary was listed.
- Minor Children: You named a minor child. Since minors cannot legally own large sums of money, a court-supervised guardianship (a form of probate) may be required.
When these funds enter the court system, they become subject to Florida probate fees and legal costs that could have otherwise been avoided.
The Florida “Divorce Rule”
Under Florida law, if you name a spouse as a beneficiary but later get divorced, that designation is generally revoked automatically upon the final judgment. However, this often leads to “lapsed” beneficiaries, which can trigger a probate filing.
If the life insurance policy is the only asset requiring court intervention, or if the estate is valued under $75,000, you may be able to use a faster, less expensive process called Probate Administration.
Need Help Navigating a Florida Probate?
If a life insurance policy has unexpectedly fallen into probate, or if you are unsure how to collect benefits, our team can help. Contact us to schedule a free 20 minute case evaluation!