Brief overview

If a life insurance policy has no living named beneficiary (or the named beneficiary predeceased the insured and no contingent beneficiary exists), many insurers will pay proceeds to the insured person’s estate. When proceeds are payable to the estate they typically become part of the probate estate and therefore can be used to satisfy the decedent’s creditors during estate administration under Washington probate law. The sections below explain how that process works under Washington law and practical steps you can take to protect proceeds where possible.

Detailed answer — how Washington treats life insurance with no beneficiary and options to protect proceeds

1. What happens if there is no valid beneficiary?

When a policy has no valid beneficiary, insurers commonly pay the death benefit to the decedent’s estate. Once proceeds become estate property they generally pass through probate and are subject to creditor claims during administration under Washington’s probate statutes (Title 11 RCW). See Washington statutes on estates and trusts: RCW Title 11 — Estates and Trusts. Insurance statutes and rules about beneficiary designations are in Washington’s insurance code: RCW Title 48 — Insurance.

2. Why does paying to the estate create exposure to creditors?

Assets that are part of the probate estate are used to pay funeral expenses, administration costs, and creditor claims before distribution to heirs or devisees. If life insurance proceeds are part of the estate, a creditor’s claim filed in probate may be satisfied from those proceeds consistent with Washington probate procedures.

3. Common ways to keep life insurance proceeds out of the estate (and away from creditor claims)

Below are common and legally viable approaches. Each has trade-offs and must be implemented correctly to work.

• Name (and regularly update) a living beneficiary: The simplest protection is to name a specific beneficiary (e.g., spouse, child, trust) — and name one or more contingent beneficiaries. A valid beneficiary designation generally creates a nonprobate transfer directly to the beneficiary, avoiding probate administration for those proceeds.
• Use an irrevocable life insurance trust (ILIT): An ILIT can own the policy (the trust is the policy owner and beneficiary). If the trust is properly drafted and funded well before death, proceeds will often avoid probate and may be shielded from the decedent’s creditors. Because rules about retained incidents of ownership affect whether proceeds remain in the estate, you must set up the trust correctly and transfer ownership while the insured is alive.
• Transfer ownership of the policy to someone else or to a trust: Transferring the policy while the insured is alive can remove the future proceeds from the insured’s probate estate. But transfers must be done carefully: if the insured retains control (the right to change beneficiary, borrow against the policy, or otherwise retain incidents of ownership), the proceeds may still be treated as estate property.
• Name a beneficiary who is likely to be insulated from the decedent’s creditors: A beneficiary trust or a spendthrift trust (if permitted and crafted correctly) can limit the beneficiary’s creditors’ access. Directly naming an individual beneficiary protects proceeds from decedent’s creditors (because the asset passes outside probate), but it does not protect the proceeds from the beneficiary’s own creditors after they receive the funds.
• Use beneficiary designations that favor beneficiaries who are not personally subject to decedent’s debts: Examples include revocable or irrevocable trusts with creditor-protection provisions (depending on governing law). The trustee’s powers and trust language matter for protection.

4. Limits and common pitfalls

• Simply writing a beneficiary name on a will does not control the insurance company. The insurer looks to the contract and beneficiary designation form, not the will, to determine who gets proceeds.
• Transfers made very close to death can raise challenges. Federal estate tax rules and, in some circumstances, state rules may bring transferred assets back into the estate if the transferor retained control. For tax rules consult a tax advisor — and for Washington estate tax rules consult a local advisor (Washington’s Department of Revenue has resources about estate tax).
• Even when proceeds avoid probate, they may still be reachable by some claimants in limited circumstances — for example, a creditor who has a specific lien or judgment may have other enforcement tools.
• An insurer will follow the beneficiary designation on file. If that designation is outdated or invalid, the insurer may pay to the estate by default.

5. Practical steps to take now (if you are the policy owner, executor, or administrator)

1. Locate the life insurance policy and any beneficiary designation forms.
2. If you are the owner and want protection, name a clear primary and contingent beneficiary on the insurer’s official form and provide updated contact information to the insurer.
3. Consider an ILIT or transferring policy ownership if you want robust probate/creditor protection — but do this only after talking to an estate planning attorney, because timing, trust terms, and retained ownership rights matter.
4. Do not assume that a will alone controls life insurance proceeds. Change beneficiaries via the insurer’s forms if you intend a different outcome.
5. If you are an executor administering an estate where proceeds were paid to the estate, identify all creditors and follow Washington’s probate procedures for creditor notice and claims (see RCW Title 11: https://app.leg.wa.gov/rcw/title11/).
6. Keep careful documentation of beneficiary forms, assignments, trust documents, and communications with the insurer.

6. When no beneficiary is named and you are administering the estate

If proceeds have been paid to the estate because no beneficiary was named, the executor or personal representative must treat the funds as estate assets and administer them under Washington probate law. Creditors with allowed claims may be paid from those assets. Work with an attorney to determine which claims are valid, how to publish or mail creditor notices under Washington law, and how to prioritize distributions.

7. Where to find Washington statutes and resources

Key Washington statute collections useful for this topic include:

• RCW Title 11 — Estates and Trusts (probate procedure and creditor claims): https://app.leg.wa.gov/rcw/title11/
• RCW Title 48 — Insurance (rules about life insurance and beneficiary designations): https://app.leg.wa.gov/rcw/title48/

Because specific fact patterns change outcomes, consult a Washington estate planning or probate attorney for action steps tailored to your situation.

Helpful Hints

• Review beneficiary designations on life insurance, retirement accounts, and payable-on-death bank accounts regularly (after marriage, divorce, births, deaths, or major life events).
• Name both primary and contingent beneficiaries to avoid ambiguity if a primary beneficiary predeceases the insured.
• If you want proceeds to be protected from estate creditors, consider an irrevocable life insurance trust — but set it up well before death and get legal and tax advice.
• Do not rely on a will to direct insurance proceeds; use the insurer’s beneficiary form to control payout.
• If you inherit or are administering an estate that received insurance proceeds, promptly identify and notify potential creditors and follow Washington probate rules for claims and distribution.
• Keep originals or certified copies of insurance policies and beneficiary forms in a safe place and tell the executor where they are located.
• Before changing owners or beneficiaries of a policy, consult both an estate attorney and a tax advisor to understand probate, creditor, and tax consequences.