When you are doing your estate planning, it is important to make sure that all of the various documents are in order and don’t conflict with one another. If there are conflicts, it can cause confusion and can complicate probate.
One example is when the instructions on your life insurance policy are in conflict with your will. For instance, maybe you have only named your first-born child as the beneficiary when making that designation on the life insurance policy. However, your second child was born after you purchased the policy, and you neglected to add them to the policy itself. Your will, however, says that the two of them should split the life insurance payout.
The beneficiary designation on the policy takes precedence
In this case, it is very important to understand that the life insurance company is not bound by your estate planning documentation. The only thing that matters to them is the beneficiary designation, so they will follow those instructions and pay the full value of the plan to your elder child.
This can lead to a conflict. Your second-born child will be able to read the estate plan and will understand that you actually wanted them to get a portion of the money. However, your elder child is not legally obligated to do so since the beneficiary designation(s) on the insurance policy takes precedence over what’s in the estate plan.
Careful planning and remembering to update your estate plan as needed can help to avoid the above conflict and many other situations that can lead to estate disputes. Take the time to carefully consider how your estate planning documentation works and how you can set the plan up to best serve your family’s needs. Having experienced estate planning helps.