A Will cannot change the beneficiary of a life insurance policy.
This is one of those simple rules that a lot of people overlook…or they just assume that when they get that fancy “witnessed and notarized” Will in their hands that all is well.
Not so fast. When you buy a life insurance policy, you are entering into a contract with that company to pay money to another person(s) when you die. You put in writing the person it must be paid to. The only way to change that contract is to sign and file with the company a change of beneficiary form.
This is often an issue when there has been a divorce. There are Tennessee cases where an ex-wife got the life insurance proceeds which were certainly intended for the ex-husband’s children. I know you will find this hard to believe, but she usually doesn’t want to give it back. Talk about trouble. Hell hath no fury…
It can also be a problem when your beneficiary is your mother or father and they are long gone. Or your sister, who used to be the model of propriety but has long since descended into the dark network of drug use. She promised to use it for your kids. Let me know how that works out.
Be smart. Be careful. Pull out your policies. Look at the beneficiaries. Better yet, get your company to send you written confirmation of the presently named beneficiaries on your policy. And while you are at it, see who is listed on your bank accounts. You will forget that you named only one of your kids as POD (pay on death) on an account, or you will assume that he will share the money with the others. Even if he is honest as the day is long, if he has creditors, they can attach that money before he can share it, or if he has had medical bills that forced him into bankruptcy, it can be lost to the bankruptcy trustee. Make it easy on everyone after you are gone. Clean up your business.
An integral part of our services in estate planning is to review your beneficiaries with you and to explain how these can affect your Will or Trust. They go hand in hand, and we make sure you understand that.
To be continued…