A widowed or single woman with four children has a sizeable life insurance policy. She decides to leave her most “responsible” child as the only beneficiary and EXPECTS that he will divvy the proceeds up equally among his siblings, as she instructed him. She also believes that she has reassurance through the Will she had drawn up that states her children receive all her property in equal shares. This should be straightforward, right? Not so fast. Having those great expectations is simply not enough. We have come across several situations where the rogue child or grandchild refuses to split the life insurance payout and a rift in the family breaks out.
Life insurance policies are contracts. The proceeds pass according to contract, not through a Will or even Probate Court (unless you do not designate a beneficiary). This means that whoever you list as the beneficiary will receive the benefit and it is within their sole discretion to use the funds as they see fit. If this person has a change of heart and decides they do not want to split those proceeds, then everyone loses out! We all want to believe that our loved ones would never behave like this, but it’s better to leave them without an option to!
The approach to the estate planning process must be holistic, because there are so many components. It’s not just about drafting documents, it’s about making sure everything is structured properly so that your wishes are truly honored- this includes ownership of assets and beneficiary designations. Contact C&G to assist you today!
P: (248) 395-3699 E: email@example.com
*Please be sure to read the disclaimer section on our site!