This video covers how a life insurance policy avoids Probate court and transfers without reference to the Last Will and Testament in Ohio. It is important to confirm your policies are up-to-date and reflect the proper beneficiary.
A common mistake is for the owner of a life insurance policy to forget to update his or her beneficiary designation; and assuming that their Will covers the transfer of this asset.
In Ohio, a Will does not control the transfer of a death benefit from life insurance; unless no beneficiary is listed. If no living person is listed as a beneficiary, the entire amount passes through Probate.
There is a common misconception regarding beneficiary designations. The person you list on your beneficiary designation for a life insurance policy, retirement account, or bank account will receive that asset regardless of what you have in your Will.
In fact, your beneficiary designations avoid Probate. By avoiding Probate these assets go directly to the beneficiary listed. It is possible for this asset to pass through Probate.
If you list your Estate as beneficiary or if the person listed (and contingent beneficiaries) are deceased the asset will not avoid Probate. This substantially increases the costs of administration and makes the asset subject to creditor claims.
The most common estate planning mistake is to have an out-of-date beneficiary designation. For example, if you are recently married (or divorced) you may not have updated your beneficiary designations. Even if you updated your Will to add (or remove) a spouse the beneficiary designation controls who receives the asset.
Review your beneficiary designations regularly to ensure the provider has the correct person listed. You can consult with your human resources department or financial advisor to verify your designations are up-to-date.