An estate is made up of several different categories of assets. Many people purchase life insurance to provide support for loved ones after a death. As with all assets after a death, life insurance figures heavily when it comes to the distribution of assets. Probate is unavoidable for all but the smallest of estates after a death, so read on to find out about the life insurance probate connection.
What Is Probate?
The laws of probate have been around for centuries and most states use older laws when dealing with these matters. The original main purposes of probate, however, still have a legitimate purpose. Those purposes are to oversee the last will and testament to ensure that beneficiaries receive their rightful inheritance and to pay the debts of the deceased. Probate, unfortunately, can take several months to be complete and beneficiaries often have to wait for their property to be released by the probate court. Also, probate will incur both court costs and legal fees.
Speeding Up Probate
Much has been made in recent years about "avoiding probate". You probably cannot avoid probate but it's entirely possible to keep some property out of probate by using the below methods. Speak to a probate lawyer to find out more about:
- Trusts, such as a revocable trust. A trust automatically overrides a last will and testament.
- Payable-on-death designations. These can work on both bank accounts and investment accounts.
- Re-titling deeds. Ask your estate lawyer about right of survivor-ship real estate deeds.
What About Life Insurance Policies?
Besides the above methods, life insurance policies presents another excellent way to keep an asset out of probate. Since a life insurance policy is considered under the ownership of the beneficiary, it does not need to be probated. You might have to wait a bit for the policies to pay, though not as long as you would for probate to end. Some people choose to pay for the final arraignments using a life insurance policy. Some funeral homes may accept a life insurance policy as a down payment or full payment of the final expenses. You will be signing the policy over to them. Any overages or shortages will be settled later. If final expenses are already taken care of, the policy is simply handed over to the named beneficiary. A death certificate will be required before the policy pays and those are usually available a few weeks after the death.
To find out more about any of the above, speak to a probate lawyer.