Funeral expense insurance and the estate are two separate worlds – and one of the product's greatest strengths is that the two typically do not mix. This article draws that line clearly, and with the necessary care.
- With a named beneficiary, the insurance payout typically does not form part of the estate.
- Probate is the legal settlement of the deceased's assets – typically a process measured in months.
- The legal details are governed by whatever rules are in force at the time – for disputed questions, a notary or lawyer can help.
What is the estate, and how is it settled?
The estate is the deceased's assets: property, savings, personal belongings, and also any debts. The estate inventory is typically taken by the local government registrar (the registrar phase), after which the notary public conducts the substantive probate proceeding through to the final order transferring the estate – the process typically takes months. Until that point, the heirs typically cannot freely dispose of the estate's assets – which is why "we'll pay for it later, out of the inheritance" is a poor plan for the costs of the farewell.
Why does insurance fall outside this?
Because naming a beneficiary follows the insurance contract's own path: the benefit is due to the named person under the contract, typically not as part of the estate – so probate's timing and outcome do not affect it. If no beneficiary is named, however, the payout typically becomes part of the estate, and from that point follows its rules. The practical difference is one of weeks versus months – the who receives the money article walks through the typical cases as well.
Where the two worlds do meet
In a few respects, insurance and inheritance law do touch: the compulsory share reserved by law for close relatives, the relationship between a will and a named beneficiary, or the case where the named beneficiary predeceases the testator. These are already legal specialist questions: whatever rules are in force at the time govern them, and in a specific situation a notary or lawyer can give a responsible answer – this site does not provide legal advice. The insurance side's job is simply to make sure the contract is set up clearly.
What can you do in advance for good order?
Three simple steps: naming a beneficiary by name (and updating it as life changes); making the contract and the documents accessible following the folder principle; and, if a will is also being drawn up, keeping it in harmony with the beneficiary designations – it is worth reviewing this with the lawyer preparing the will, too. That way, each of the two worlds does its job smoothly, on its own path.
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