Are life insurance benefits considered part of a decedent’s estate?

I have 2 life insurance policies. One is a personal policy with a death benefit of approximately $160,000. The second is a policy where I work that carries a death benefit of approximately $200,000. Currently my wife is the beneficiary on both policies. We have a will and I have stated that I want one third of my estate to go to my adult step-son. My question is this: Are life insurance benefits considered part of a decedent’s estate, i.e., if I died today would the one-third of my estate going to my step-son include one-third of those life insurance benefits?

Certain assets, such as trusts, transfer on death accounts, and joint assets with a right of survivorship aren’t included as part of the probate estate and pass directly to the beneficiary on death. For example, a life insurance policy may name a beneficiary, and transfer on death, avoiding probate. A home owned as joint tenants with a right of survivorship will also pass directly to the surviving owner and is not part of the probate estate.

Life insurance proceeds are typically transfer on death assets, meaning that they’re not included in the deceased estate and pass directly to the beneficiaries outside the probate process. However, it is possible to place a life insurance policy in a trust, so that the trustee pays the premiums. A living trust may be created during the life of a policyholder. Some trusts are created with a provision that the trustee dictates exactly how much each beneficiary gets. Some people create a trust to minimize estate taxes which apply to large estates.

If the decedent owns the policy, proceeds are includable in his federal taxable estate, even though paid to somebody else, unless an irrevocable trust owns the policy. The proceeds are likewise includable if the policy owner names his “estate” as beneficiary.


If you view this content and need to ask a related question or need services that relate to this question, Contact me.

All content is for informational purposes only. It is also only intended to relate to Mississippi Estate Planning Law.  If other states are mentioned, they are mentioned as an example only. No legal advice is provided in this content. Laws change so you need to check for any updates by current laws in Mississippi.