Definition of "estate", as it applies to life insurance?

Question

As it applies to this sentence: "The advantage of designating multiple levels of beneficiaries is to keep insurance proceeds out of a beneficiary's ESTATE and to avoid probate."
I have these definitions of "estate" but do not know which one applies: 1)the property of a deceased person, a bankrupt, etc., viewed as an aggregate 2)The whole of one's possessions, especially all the property and debts left by one at death 3)equitable estate:: the estate of one that has a beneficial right to property which is legally owned by a trustee or a person regarded at equity as a trustee (as in the case of a use or power) .....plus many more that might apply! Please help me, I am stuck!

Answer 1

For your insurance policy, "estate" means the property of the dead person.

Insurance proceeds are paid to the beneficiary. In the absence of a beneficiary, the proceeds to into the assets the dead person leaves behind -- the estate. Thats not a good idea because this may subject the proceeds to estate and inheritance tax. So your insurance company is suggesting what every agent should tell you: specify beneficiaries, who will receive the insurance policy benefit tax free.

Answer 2

Number 2 is the best definition you've given. Numbers 1 and 3 miss the mark, because the law recognizes that one cannot own anything after their death.

The same hold true with debts: a deceased person cannot owe anything to anyone. Only the deceased's estate can owe the debt. Valid debts are addressed by selling the deceased's material possessions.

Answer 3

Upstate answers right. Insurance estate is property and debts left at death.

Always name person beneficiary and person second beneficiary. If money goes to estate is possible no one gets because is tied to probate. All could wind up paying debt and attorney.

Is best name person first and person contingent. Or if no person name charity or church or real thing not estate.

Answer 4

It's all the "stuff" legally owned by the dead person, plus all their debts. ALL of these definitions are correct.

Someone has to sort through the "stuff" and the debts, pay off the debts with the "stuff", sometimes sell the "stuff", and distribute the leftover "stuff" to the heirs after all the debts are paid.