Thursday, March 03, 2011 NEET Tips
NEET Tips answers questions posed online to the NEET website
Is a life insurance policy that has a beneficiary designation part of one’s probate estate?
If a life insurance policy has a proper beneficiary designation, and the beneficiary is alive to receive the proceeds, then the life insurance proceeds should not be part of the Vermont probate estate. Proceeds from life insurance policies pass via contract, which supersedes the provisions of a will.
Keep in mind that one’s probate estate is different from one’s taxable estate. Proceeds from life insurance policies are usually included in the decedent’s taxable estate, unless the policy is owned by an irrevocable life insurance trust (ILIT).
For more information on life insurance and beneficiary designations in estate planning, see the NEET articles:
Uses of Life Insurance in Estate Planning
Doubling Life Insurance Proceeds With an ILIT
Beneficiary Designations Are the Final Word |