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Does the beneficary of a life insurance policy need to turn the funds over to the estate to pay bills

Bangor, ME |

Does the beneficiary of a life insurance policy need to turn the funds over to the estate to pay bills and later disperse the funds with all assets?

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Attorney answers 2


In Wisconsin, and I suspect in most states, the beneficiary would have no legal obligation to turn life insurance proceeds over to the estate to pay bills or to be distributed with other probate assets. Life insurance proceeds pass to beneficiaries by "operation of law" which means they are distributed according to the state and federal statutes that govern life insurance rather than state probate statutes.

If a decedent has named an individual as the beneficiary of his life insurance, the beneficiary will receive the proceeds directly from the insurance company and not from the personal representative/executor of the estate. The beneficiary is not required to share the proceeds with the estate or other beneficiaries named in a Will. Furthermore, unless specified in the Will, the insurance proceeds should not be counted as a portion of what the beneficiary is entitled to receive under the terms of the Will. The decedent's Will only controls property that is subject to probate law i.e. property that does not have a beneficiary or payable on death designation,unless the decedent has named his estate as the beneficiary.


No. As Heather explained, death benefits from a life insurance policy pass directly from the insurance company to the named beneficiary, outside of the probate process. This means that the insurance proceeds cannot be reached by the personal representative of the estate for payment of debts or for offset against any assets passing to the beneficiary through the will (or by intestate succession, if there is no will).

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