Most of your assets are probably going to be distributed through a will. You could also use a trust, a payable-on-death (POD) account or something of this nature. But most people will simply write out a will specifying how they want their assets to be distributed.
As such, you may be trying to determine what to do with your life insurance policy. You know that it’s going to pay out when you pass away. But you have multiple heirs, and you want them all to benefit. Can you use your existing will to split up the policy?
Did you already choose a beneficiary?
In most cases, when you buy a life insurance policy, they make you choose a beneficiary. This person will be paid the entire contents of the policy. If you’d like to divide it between multiple people, you have to name multiple beneficiaries.
However, if you only named one beneficiary, your will isn’t going to make a difference. It could say that your heirs have to divide the policy evenly among three or four people, but they’re not obligated to follow your will. Your beneficiary will simply get paid directly, and they can decide to do whatever they want with the money they receive.
The only time that a will is going to have an impact is if you didn’t name a beneficiary and so the policy pays out into your estate. Your estate is distributed by your will, but a life insurance policy with a beneficiary skips this step.
You can see how this may become a bit more complicated than you assumed. It’s very important to know about all the legal options at your disposal.
