Ideally, when you draft an estate plan, all of the different documents will work together seamlessly. This could include your will, your life insurance policy, any trusts that you have created, powers of attorney and much more.
But in some cases, there may be a conflict. There could be different instructions in different documents.
For instance, say that you purchased a life insurance policy when you had two children, believing you were not going to have another child and wanting to provide for their future. But you unexpectedly had a third child 10 years later.
You named your first two children as beneficiaries on the life insurance policy, so they should split the payout. But for your third child, you simply wrote in the estate plan that all three should divide the money into thirds. Since the instructions are different, what happens?
The life insurance policy takes precedence
In this situation, your third child would likely have no right to the money in that life insurance payout. The life insurance provider would just pay your two older children as instructed, circumventing the instructions in your will.
The easiest way to avoid such a conflict is to update the beneficiary designation on the life insurance policy. Keep in mind that, if you fail to do so, the older children would not be legally obligated to share the money with their younger sibling. They may do so if they choose, but it could lead to conflicts where that sibling feels left out of an inheritance that they deserved.
This helps to show some of the complexities of drafting an estate plan and why it can help to work with an experienced attorney.
