Your will could be trumped by a life insurance policy

Your will could be trumped by a life insurance policy

| Jul 15, 2021 | Estate Planning & Probate |

Your estate plan focuses on dividing things equally between your three children. That has always been your goal. You know how common disputes are when the plan is not equal for all.

Your will quite simply splits things into thirds: your investments, your bank accounts, the money from the sale of your house, etc. You also have a life insurance policy, so you add a note to your will that the money should get divided in thirds, just like everything else, when you pass away.

Is that going to work? Are your wishes going to be followed?

Who did you choose as a beneficiary?

The key is to look at the beneficiary designation on the life insurance policy itself. If you did not name all three children, your will may not be followed.

The life insurance provider will always follow the beneficiary designation. If you only had one child when you bought the policy and you named that child in the paperwork, 100% of the payout goes to them. The life insurance company does not have to check with your will and estate plan.

Now, your eldest child may divide the money three ways in the above example. They certainly can do so. Just note that they do not have to do so, even though your estate plan says so. Make sure you update all of the paperwork when making any changes.

A plan that works

It’s crucial to have a complete plan that really works for your family. Make sure you are well aware of the beneficiary designation you’ll need to take.