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Is a Life Insurance Policy a Probate Asset?


One of the more common points of confusion when it comes to administering a deceased person’s property is the legal distinction between probate and non-probate assets. Generally speaking, a probate asset is one that passes according to the terms of the deceased owner’s last will and testament; or they had no will, then as provided by Florida’s intestacy (inheritance) laws.

Non-probate assets, in contrast, typically transfer to a new owner upon the original owner’s death without passing through their estate. For example, if you have a bank account that is titled “payable on death” to your daughter, then that account is a non-probate asset. Title simply passes to your daughter when you die.

Possible Suicide Prompts Insurance Company Lawsuit to Rescind Policy

Life insurance is another common non-probate asset. Unless the estate itself is named as the beneficiary, the proceeds of such policies vest directly in the named beneficiaries. As such, Florida probate courts usually do not have jurisdiction to hear any legal disputes that might arise over life insurance policies.

A recent decision from a federal judge in Fort Myers, The Northwestern Mutual Life Insurance Company v. Cross, provides a case in point. This lawsuit centered on a $1.4 million term life insurance policy taken out by a doctor on his own life. In August 2022, the doctor filed paperwork to change the beneficiary of the policy from his wife–who had just filed for divorce–to his children.

Four days later, the doctor took his boat out. He was never seen again. The boat was later found about 16 miles away from its home marina, but the doctor’s body was not recovered.

The wife, acting as guardian for the couple’s children, demanded the insurance company pay the $1.4 million. The insurance company filed suit in federal court, however, alleging it had the right to rescind the policy based on misrepresentations the doctor made in his insurance application. Specifically, the insurer alleged the doctor failed to disclose he had been hospitalized for two prior suicide attempts.

Florida law permits an insurance company to rescind a policy if the insurer can provide it “justifiably relied on material misrepresentations” made by the policyholder. The wife asserted that this was a probate matter. If the insurer sought to void the life insurance policy, she argued, it had to file a claim against her late husband’s probate estate, which it failed to do.

The judge, however, said this was clearly not a probate matter. The “proceeds of life insurance, payable to an individual beneficiary, do not pass through the estate of the deceased.” So any legal determination as to whether the policy was void could properly be decided by the federal court.

Contact Florida Probate Litigation Attorney Mark R. Manceri Today

If you are involved in a legal dispute over the probate or non-probate assets of a recently deceased individual, it is best to seek out competent legal advice from an experienced Pompano Beach estate and trust litigation lawyer. Call the Pompano Beach estate and trust litigation lawyers at the offices of Mark R. Manceri, P.A., today at 954-491-7099 to schedule a consultation.



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