Generally, the answer is no.  Rather, you should name individuals or trusts for individuals as the primary and contingent beneficiaries.  This is the most efficient way to pass life insurance benefits in an asset protected manner.

After an insured dies, the named beneficiary or beneficiaries present to the life insurance company, a death certificate with a completed claim form. Then, usually within less than 30 days, the company pays death benefit directly to the beneficiary or beneficiaries (assuming the life insurance does not contest the claim). The death benefits in Florida are insulated from the insured’s or his estate’s creditors and from the probate process.  In other words, the benefits are not subject to reduction or forfeiture by the deceased person’s creditors. Further, if the death benefits are paid to the named beneficiaries, then they bypass probate and cannot be reduced or used by the Estate’s Personal Representative to pay administrative expenses such as attorney fees, Personal Representative fees, and accountant fees.

What happens if you name your estate as beneficiary of a life insurance policy?  In that case, the Personal Representative of the estate must file the death claim with the insurance company and the cash must be deposited into the estate account.  Fla. Stat. 222.13 provides, in part, that “the insurance proceeds shall become a part of the insured’s estate for all purposes and shall be administered by the personal representative of the estate of the insured in accordance with the probate laws of the state in like manner as other assets of the insured’s estate.”  This means that the proceeds are not exempt from the estate’s creditors and are subject to probate and available to pay administrative expenses. This can be a horrible result.  The life insurance proceeds will be subject to creditor claims and there will likely be delays and expense that otherwise would not be present if the proceeds were paid directly to beneficiaries.

In most cases, if you fail to name a beneficiary on your life insurance policy or the beneficiaries that are named fail to survive the insured, then the  policy is payable to the insured’s estate.

The bottom line is to integrate life insurance as part of your estate plan and allow your estate planning attorney advise you of the best way to achieve your goals with the life insurance proceeds so that the probate attorney does not have to include the life insurance policy cash payment as part of the probate available to creditors.

Note: This blog is designed for general information only. The information presented at this site should not be construed as formal legal advice nor the formation of a lawyer/client relationship. If you would like to contact Stuart A. Rader regarding an area of probate and trust administration, estate planning, taxation, and succession planning for closely held businesses, please email counselor@floridaprobatelawblog.com.