Are life insurance proceeds part of deceased’s estate if they are payable to a person?

Mom’s 3 life insurance policies were made payable to me, as sole beneficiary. However, after paying her funeral expenses, the attorney said the proceeds were part of her estate and made me deposit the proceeds, approximately 11,000, into the estate checking account. How can they be part of her estate if I was the sole named beneficiary of all 3 policies? I thought life insurance policies were paid to the named beneficiary and the proceeds were theirs to keep?

Asked on September 4, 2016 under Estate Planning, Ohio

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Polices proceeds payable directly to a named beneficiary are not part of the estate, the same way that the money in a "payable on death" (POD) or "transfer on death" (TOD) account is not part of the estate. The money would yours, not the estate's, if you were the named beneficiary on the policies. Based on what you write, this lawyer apparently either did not understand the law or deliberately misinformed you. The money should be returned to you.


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