Florida Probate Rule 5.400

Are life insurance proceeds subject to probate?

Short answer? No. But there are exceptions, of course.

Death benefits which are payable under your life insurance are not considered estate assets. This means they will not be distributed pursuant to your last Will. 

This may mean that, if you are not careful, your life insurance proceeds may go to the wrong people.

The life insurance company is obligated to pay the death benefits to whomever you named as the beneficiary (or beneficiaries).  You can change that beneficiary with your life insurance company by utilizing the company’s appropriate form for changing the beneficiary designation. This is separate and apart from your Will.   

Not surprisingly, there are exceptions. If there is no beneficiary designated, or the named beneficiary dies prior to the insured, there is no alternate (contingent) beneficiary named, and there was no timely change of beneficiary form completed with the life insurance company, then your estate becomes the beneficiary.  In other words, life insurance policies typically pay the money directly to the beneficiary, assuming he or she survives the insured. If the beneficiary predeceases the insured, then the life insurance money then becomes an estate asset and is subject to Florida probate.

Not surprisingly, trouble can arise, such as if a beneficiary named in a life insurance policy is different from that in a decedent’s estate; it may be a distribution that was not intended.  For example, the decedent may have updated their Will at some point prior to death, but did not change the beneficiary designated on their life insurance. 

It is important to note that sometimes people to do not remember to update their beneficiary designations after divorce.  Fortunately, Florida law addressed this by statute, that designations to an ex-spouse are no longer valid after divorce.  Florida Statute 732.703 provides in relevant part:

(2) A designation made by or on behalf of the decedent providing for the payment or transfer at death of an interest in an asset to or for the benefit of the decedent’s former spouse is void as of the time the decedent’s marriage was judicially dissolved or declared invalid by court order prior to the decedent’s death, if the designation was made prior to the dissolution or court order.

The take-away is that in updating your Will, you should also be sure to update the designated beneficiary or beneficiaries on your life insurance policy.  This is important because it will assure that your life insurance money is not subjected to Florida probate, a savings of both expenses and time.  When going through major life events – such as marriage, divorce, having children, the death of a family member, etc. – you should be sure to check your beneficiary designations on your life insurance.  This is another important topic to be sure to discuss at the time of updating your Will with your trusted probate lawyer.