Question 47

A court will distribute the proceeds strictly according to state law.

When Quentin names his estate as the beneficiary of his life insurance and dies without a will, the distribution of the proceeds will be governed by state law. This means that a court will oversee the process to ensure that the assets are allocated according to the state's intestacy laws.

A) it will cut down on estate taxes.

This option is incorrect because naming the estate as the beneficiary does not inherently reduce estate taxes. In fact, the proceeds may be included in the taxable estate, and therefore, estate taxes may still apply based on the overall value of the estate.

B) there will be no probate costs.

This option is also incorrect. Even though naming the estate as the beneficiary may streamline certain aspects, it does not eliminate probate costs since the estate will still need to go through the probate process to distribute assets according to state law.

C) his heirs will be able to divide the proceeds according to their needs.

This choice is incorrect as well. Without a will, the heirs cannot simply divide the proceeds as they wish; instead, the court will dictate the distribution based on the intestacy laws, which may not align with the heirs' needs or preferences.

D) a court will distribute the proceeds strictly according to state law.

This is the correct option because, in the absence of a will, state law governs how the estate's assets, including life insurance proceeds, will be distributed. The court's role is to ensure compliance with these laws, which may not consider the specific wishes of the deceased.

Conclusion

In conclusion, option D is definitively correct as it accurately reflects the legal process that occurs when a person dies intestate. The other options fail to acknowledge the legal implications of naming the estate as the beneficiary and the necessity of court involvement in distributing assets according to state law.