Arebank accounts/IRAs/life insurance policies with designated beneficiaries part of a probate estate?

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Arebank accounts/IRAs/life insurance policies with designated beneficiaries part of a probate estate?

Do bank accounts/IRAs/Life Insurance policies with designated beneficiaries have to go through probate?

Asked on August 13, 2010 under Estate Planning, Indiana

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Probate law and estate planning in general (whether it be a will/trust, both or neither) are complicated areas of law and differ in each state.  The general rule of thumb by which most states follow in terms of probate law is that any accounts (like bank accounts, IRAs, insurance policies and trusts) fall outside of the probate process and do not go through probate because the policies simply pay out to the beneficiary or beneficiaries (if multiple individuals or entities are named).  The only time this becomes an issue is if the pay out itself is somehow immediately contested via a civil lawsuit.  The types of lawsuits that stem from such policies and accounts include private suits from creditors or contesting the soundness or competency of the decedent when either creating the account or naming the beneficiaries.  Abuse of the relationship is a common one among families when one family member is named as the sole beneficiary (usually a caretaker) to the chagrin of other family members, for example.


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