Are life insurance proceeds part of the estate?
If my husband passes away will his life insurance, that I am the beneficiary of, go to me or his estate? Will those funds be required to pay off any debts that he has? It is a second marriage for us both so we both have debts that do not include the other (they were incurred prior to our marriage). If the children are the beneficiaries, the same question. Where do the life insurance funds go and do they have to go through probate also?
A life insurance policy is governed by contract. This means that the probate court and estate does not interfere. The obligation of the insurance company to pay the named beneficiary therefore, does not get distorted based on the estate. In this case, the contract states that you are the beneficiary. Therefore, upon the death of your husband, the insurance company has a contractual obligation to pay you, or whoever is the named beneficiary on the life insurance policy. The insurance company is not going to pay the estate. The proceeds of the policy are not to be used to pay your husband's debts, but rather is for the benefit of the beneficiary.