Probate is the legal process for administering and distributing the estate of a deceased individual. Typically, life insurance proceeds are not subject to probate in California or in any state. Life insurance policies, as well as retirement benefit accounts, have beneficiary designations to determine their distribution. However, there are exceptions that require life insurance proceeds to be probated.
Life Insurance with a Designated Beneficiary
If the insured named a primary beneficiary of the life insurance proceeds and that person survives the insured, the primary beneficiary will received the life insurance proceeds directly. The proceeds do not need to pass through probate before the designated beneficiary receives the money.
Life Insurance with the Estate as Beneficiary
If the insured names his estate as the beneficiary, the life insurance proceeds will be paid to the insured's estate and the cash is subject to probate. If the insured named his trust as the beneficiary, such as the Smith Family Trust, the cash would be distributed as directed in the trust and would not be subject to probate.
Life Insurance with the Deceased as Beneficiary
If the designated beneficiary predeceases the insured, the life insurance proceeds will pass to the contingent beneficiary. If the insured did not name a contingent beneficiary, the proceeds will be paid to the insured's estate and must go through the probate process.
How Life Insurance Proceeds are Probated
The probate court will determine how to distribute the life insurance proceeds paid to the estate. The insured's will governs who inherits the life insurance proceeds. If the insured dies intestate, or without a will, California intestate succession statutes govern what heirs receive the life insurance proceeds paid to the estate.