What Happens to Your Life Insurance in Ohio After You Die?
When a policyholder in Ohio dies, their life insurance policy does not automatically become part of their estate. Instead, the death benefit is paid out to the beneficiaries listed in the policy. Here's a breakdown of how Ohio law treats life insurance after the policyholder's death.
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Beneficiary Designation Overrides Will
In Ohio, the beneficiary designation on a life insurance policy controls who receives the death benefit, not the deceased's will. This is because life insurance policies are considered non-probate assets, meaning they do not go through the probate process.
Types of Beneficiary Designations
- Primary Beneficiary: The first person or entity named to receive the death benefit.
- Contingent Beneficiary: The backup person or entity named to receive the death benefit if the primary beneficiary is unable or unwilling to do so.
Life Insurance and Ohio Estate Tax
As of 2021, Ohio does not have an estate tax. However, life insurance proceeds may still be subject to federal estate tax if the estate's value exceeds the federal exemption amount ($11.7 million in 2021).
What If There's No Beneficiary or the Beneficiary Has Predeceased You?
If the policyholder has not named a beneficiary or all named beneficiaries have died, the life insurance company will pay the death benefit to the estate. The death benefit will then be distributed according to the terms of the will or, if no will exists, according to Ohio's laws of intestate succession.
Changing Beneficiary Designation
Policyholders can change their beneficiary designation at any time by contacting their life insurance company and submitting a new beneficiary form. It's crucial to review and update beneficiary designations after significant life events, such as marriage, divorce, or the birth of a child.
| Event | Action |
|---|---|
| Marriage | Consider naming your spouse as a beneficiary |
| Divorce | Remove your former spouse as a beneficiary |
| Birth or adoption of a child | Consider adding your child as a beneficiary |
Always consult with a legal or financial professional to ensure your beneficiary designations align with your estate planning goals.