Insurance and Probate

Life insurance usually does not go through probate if a named beneficiary receives the pay-out directly, bypassing the deceased’s estate and the lengthy probate process.

The most common way that this happens is that married couples have a joint life first death insurance policy where it pays to their spouse. On first death things are fine because there is no Tax between married couples however the remaining person now has all the funds inside their estate, which means that when they pass the funds are taxable.

This is why we recommend that insurance policies are nominated into trust for the benefit of the people you want to gain from the payout. In this way they still get the money but their estate doesn’t increase due to payout

If you would like to know more detail about how this works and how to do it in your estate then give me a call.