If you’re writing a will, it’s a way to divide the assets that you want. You can specify which of your children, grandchildren or other beneficiaries are going to get specific items. For instance, your will may say that your children will all share the family home or that they should split up the contents of your bank account. You can also leave sentimental items directly to certain people to reduce the odds of a dispute.
But you may also own a life insurance policy, which is going to pay out a large amount of money when you pass away. This is one of the ways that you have planned in advance to provide for your family after you are gone. But do you need to include that life insurance in your will?
The policy has its own beneficiaries
You typically do not need to include it in your will because the policy itself should have beneficiary designations that you set up through the company for the life insurance policy.
For example, if you have two children, you can name them both as beneficiaries so that they share the payment. You don’t have to tell them to do so in your will because the insurance company will do it automatically.
Conversely, if there is a conflict between your will and the beneficiary designation, the insurance company is going to follow the designation they have on file. Say that you’ve only named one person as a beneficiary, but your will says that they should share the payment with someone else, like a sibling. They can do so if they choose to, but the life insurance company still only has to pay that one person.
It is important to check and, if necessary, update your beneficiary designations for your life insurance when you are creating an estate plan.
If you wish to discuss your estate plan and/or beneficiary designations further, kindly contact our estate planning and administration partner, Michelle E. Smith, Esq.
