Estate planning can get complicated when you have assets like a life insurance policy, an investment portfolio, money in savings, a family home and many other large assets. You need to know how to address each one and how to include it in the plan.
The general rule of thumb for life insurance, however, is that it doesn’t need to be in your will at all. You don’t need to make it part of your estate plan. After all, if you do, there’s a chance that the two won’t agree with each other.
The life insurance beneficiary is more important
For example, say that your life insurance policy lists just one child as the sole beneficiary. But you also have two other children who were born after you bought the policy, so you put in your will that the three kids all need to split up the money. This will not be done, as the life insurance policy will be distributed separately and will go only to the person that you named. It doesn’t even matter if your will disagrees with this because there’s no legal obligation for anyone to follow those instructions.
Of course, this can lead to some serious disputes between your heirs and some heartache for those who are left, especially if they feel like they haven’t been treated fairly or that your wishes haven’t been observed properly. You can see how this could be an easy mistake to make if you just assume that anything you write in your will is going to stand. But that’s just not how it works.
As such, it’s very important to take the time to carefully look into all of the options that you have so that you know your plan has been created properly for your family.