Re: Property of the Estate

It depends upon who owns the policy. If the policy is owned by either a trust or one of the grantors of the trust or by the deceased, then it would be considered property of the estate and included for tax purposes.

If the beneficiary is also the owner of the policy and not the decedent but the policy is on the decedent's life, then the policy falls outside the estate and would not be included for tax purposes.

This is very important because the proceeds of a life insurance policy are normally tax free, except when they are part of an estate.

A retirement account is part of the estate.

The question turns more on who owns the policy than who the beneficiary of the policy is.

Re: Property of the Estate

Retirment stock or mutual fund accounts normally have a beneficiary listed as do Life Insurance accounts and they normally do not fall under the estate.

Re: Property of the Estate

Howdy:

Life insurance and retirements accounts have a listed beneficiary. So, as far as disbursement goes, these assets follow the listed beneficiary, rather than any provision of a will or trust.

But, you do include the value of the insurance policy or retirement fund in the total value of the estate for probate or estate tax purposes.

Sometimes life insurance will be purchased for the purpose of paying either debts or taxes. In these cases, the trust or trustee is usually named as a beneficiary.

Assuming that the insurance policy(ies) or retirement fund(s) have an heir listed as beneficiary, the proceeds should go directly to that heir, rather than to pay debts of the estate.

Creditors usually cannot attach insurance proceeds for settlement of estate debts.

Re: Property of the Estate

A trust can be the named beneficiary. Otherwise, the proceeds go to the beneficiary named in the policy and not to the estate.