Wills vs. Insurance Policies: Which One Controls

Wills vs. Insurance Policies: Which One Controls

When a person dies it often comes down to the Executor who is administering the estate to ensure that all assets are properly distributed. When this is done without the assistance of a will, probate is administered intestate, which means that you default to whatever state you are administering the probate in for the rules of who gets what from the estate. When the decedent had a will that was witnessed and is filed with the Courthouse the distributions are to be made pursuant to the instructions left in the will. But are those instructions all encompassing and do they control in every situation? The short answer is no.

Property that is encompassed in a will is all of the decedents personal property and real estate owned by them. This includes bank accounts, savings accounts, personal items, vehicles, real estate and other tangible items. However, this does not incorporate things that already note who the beneficiaries are. An example of something like this would be an insurance policy or a retirement account. An insurance policy, such as life insurance, is a policy and agreement that the person arranges with an insurance company. When the policy is created, the insurance company asks that the holder designate the beneficiaries of the policy. Upon the holder’s death, the insurance company will distribute the funds based on the policies’ designations.

Insurance agencies will almost never agree to distribute funds in anyway other than what their policy says. Since insurance policies are not covered in probate, the will can mention them, but it won’t matter as the policies themselves would control their own distribution.

The only way for a Will to affect the distribution of an Insurance Policy would be if the holder of the policy were allowed to name himself or his estate as the beneficiary. Some insurance companies may want a specific person or a person other than the policy holder to be the beneficiary. The rules for the beneficiary designation are based on the Insurance company internal rules so you should speak with your insurance carrier about their policies and rules for beneficiary designations.

Another possible option for a policy holder to have insurance proceeds affected by his post-death wishes would be to establish a trust and make the trust the beneficiary of the proceeds. The proceeds would be sent directly to the trust upon the death of the policy holder and then all property in the trust is distributed  and managed and managed by the trustee pursuant to the rules established in the trust documents.

When you are setting up your estate, be it with a will, a trust, and with policies which designate beneficiaries. You want to make sure that all your property is encompassed and accounted for. Many people feel this can be accomplished with a simple will, but as discussed above, it is not that simple and there may be property that is distributed in a different fashion than what is described in the will. For these reasons it is very important to speak with an estate planning attorney to review your assets and any current policies you have with you to ensure everything is accounted for and going to the correct person upon your passing.

If you have questions about your will, your trust and how they may affect your insurance policies, retirement accounts, pensions, etc.. please consider contacting the Law Office of Andrew Szocka P.C. by calling us at 815-455-8430 or emailing us at info@szocka.com  We have extensive experience in estate planning and will ensure that when the time comes to distribute your assets, there are no conflicts or confusion as to how your assets are distributed, policy or no.

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