Nonprobate assets are an integral part of your estate plan. This piece seeks to address only those nonprobate assets that are insured at the time of your passing.
Nonprobate assets are those that are not subject to probate for one reason or another. For example, a beneficiary deed in Colorado can pass your house to your desired beneficiary or beneficiaries without the need to go through probate. Similarly, a transfer on death deed in Texas functions the same way.
However, it is very important to keep insurance information regarding those nonprobate assets that are insured, like real property and vehicles, with your estate planning documents, including the policy provider, the policy number, and the agent with whom you work (including their contact information).
Strope-Robinson v. State Farm Fire & Cas. Co. brought this issue to the forefront of estate planners’ minds. This case, while not authoritative in all jurisdictions, has implications across the country with respect to insurance on nonprobate assets after the policyholder passes. In Strope-Robinson, a beneficiary did not update the insurance on real property owned by the decedent upon the decedent’s passing, which was destroyed due to a fire within days thereafter. Because the beneficiary had not procured insurance, or updated the insurance, before the fire, the value of the home was not recoverable–despite the fact that the decedent’s ex-wife set fire to the home, ostensibly on purpose. On February 5, 2021, the 8th Circuit affirmed this ruling.
This case serves as an important lesson in estate planning. It’s a great idea to let the beneficiary or beneficiaries of your nonprobate assets know whether the asset in insured, and if so, with which company, under which policy number, and the agent who helped you put the policy in place (including their contact information). The beneficiary or beneficiaries should also be instructed to contact the agent and/or the company immediately upon your passing to protect the asset.
To learn more about nonprobate assets and how these assets can factor into your unique estate plan, contact McGraw Law PLLC for a consultation.