When you had your first child, you did two things: You wrote a will and you bought a life insurance policy. You put most of your assets into the will, perhaps instructing them to be transferred to a trust and held for your child if you passed away before they turned 18. You also named them as the beneficiary of the life insurance policy. No matter what happened, you knew your child would be taken care of.
In the years since, though, you’ve had a second child. You want to divide the life insurance policy between both of your children. Should you just add a line or a clause to your will saying that they should split it up?
You need to change the beneficiary designation
Writing this type of clause in your will won’t be effective. What you have to do is change the actual beneficiary designation that was made on the insurance paperwork.
If you don’t, your will is not going to dictate how the insurance money gets divided. After all, that money isn’t in your estate at all. The life insurance provider simply pays the noted beneficiary when you pass away.
So your will could say that both of your children should split the money up. But the life insurance company is still just going to mail the check to your oldest child, who then has no legal obligation to share it with anyone.
This could lead to a dispute between your beneficiaries, and it means that your wishes would not be honored. That’s why it’s so important to know exactly what legal steps you should take when drafting an estate plan or making these important updates.
