Does a Will overrule a life insurance beneficiary, or vice versa?

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Does a Will overrule a life insurance beneficiary, or vice versa?

Last year, I took out a life insurance policy and designated my cousin to be the full beneficiary. Last month, I created a Will that stipulated all assets (I assumed life insurance policies would be included) were to be evenly divided amongst several family members (my cousin included). When I die, which document will the law follow? I’d prefer the assets be distributed evenly, so what do I have to do to make sure that happens?

Asked on September 8, 2011 under Estate Planning, Texas

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

A beneficiary of life insurance proceeds has nothing to do with being named as a beneficiary of a Will.  The reason is the certain monies pass outside of the probate estate; this includes life insurance proceeds.  Therefore, a beneficiary under a life insurance policy is entitled to the proceeds regardless of any contrary terms of a Will.

The way to get around this and to have the proceeds split evenly, is to make the beneficiary of the policy your estate.  At that point the proceeds will be paid out according to the terms of the Will. Also, if no beneficiary is designated on the policy, the proceeds will pass will pass via the "residuary clause" (the one that reads , "All the rest, residue, and remainder..."). Either way, you need to remove your cousin as beneficiary of the policy.

 


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