How Are Insurance Policy Proceeds Payable to the Estate Distributed?
Full Question:
Answer:
When a person dies, their assets are distributed in the probate process. If a person dies with a valid will, an executor is named to handle the distribution of the estate. If the person dies without a valid will, the court appoints an administrator to distribute the decedent's assets according to the state's laws of intestacy. The court will issue letters of administration to the administrator, giving the authority to handle the affairs of the deceased. An heirship affidavit may also be used to conduct estate affairs when a small estate is involved. In cases where the decedent didn't own property valued at more than a certain amount, which varies by state, the estate may go through a small estate administration process, rather than the formal probate process.
In California, if the value of a decedent's estate doesn't exceed $100,000, the small estate procedures may be used to collect and distribute the assets of the estate. An heirship affidavit may be used in place of letters of administration. An attorney is not required.
Pursuant to California law, assets outside of the living trust which do not exceed $100,000 do not require probate, and may be transferred by affidavit procedure. This $100,000 figure does not include any assets held in joint tenancy, any assets where a beneficiary is named as a life insurance or IRA account, or any vehicles. Property meeting these requirements can be transferred into the living trust, or to whoever is legally entitled to the asset, using a special certification form. The trustee must wait for 40 days to elapse from the decedent's date of death. However, an exception is when a life insurance policy is payable to the decedent's estate, then probate will be necessary. Life indurance proceeds payable to the estate ar eincluded as part of the decedent's gross estate for probate purposes.
