In Tennessee is Life Insurance a Probate Asset that Requires a Probate Proceeding?

Posted on Jan 11 2014 5:39PM by Attorney, Jason A. Lee

The answer is almost always no.  As long as the life insurance policy has named beneficiaries (other than the estate) it is not subject to probate in Tennessee and passes outside of probate. (for a discussion on other assets that are no probate assets read this article here).  Most often, the named beneficiaries simply need to fill out some forms that the life insurance company has and the money will be distributed rather quickly.  This payment is not subject to creditors of the person who died (See T.C.A. § 56-7-201).

T.C.A. § 56-7-201 also provides that even if the estate is listed as a beneficiary of the life insurance policy, the money is still not subject to the debts of the decedent unless specifically stated in the will.  The entire text of T.C.A. § 56-7-201 provides as follows:

On the death of an insured, any life insurance acquired by the insured or the insured's spouse and payable to the intestate insured's estate benefits the surviving spouse and children and the proceeds shall be divided between them according to the statutes of distribution without being in any manner subject to the debts of the decedent. If the proceeds of the insurance are payable to the estate of a testate decedent or the trustee of a revocable trust of which the decedent was a settlor, the proceeds shall pass as part of the estate or trust and under the dispositive provisions of the will or trust agreement, as ordinary cash, whether or not the will or trust agreement uses any apt or express words referring to the insurance proceeds, but the proceeds shall not be subject to the debts of the decedent unless specifically charged with the debts in the will or trust agreement.

As a result, even naming the estate as a beneficiary in your life insurance policy does not have all of the potentially negative baggage for other probate assets.  In fact, there is a good argument that doing so can be a good decision in certain circumstances.  You would need to consult with an experienced Tennessee estate planning attorney to discuss your specific circumstance more.  For a listing of assets that are probate assets, read this article here.

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.

TAGS: Life Insurance, Debts of Estate, Creditor claims, Probate Assets, Tennessee Probate Law
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Jason A. Lee is a Member of Burrow Lee, PLLC. Contact Jason at 615-540-1004 or jlee@burrowlee.com for an initial consultation on wills estate planning and probate issues.

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Tennessee Wills and Estates Blog
Jason A. Lee, Member of Burrow Lee, PLLC
611 Commerce Street, Suite 2603
Nashville, TN 37203
Phone: 615-540-1004
E-mail: jlee@burrowlee.com