Your parent passes away and you and your sibling begin dividing up the assets. Thankfully, your parent has left a will and an estate plan. The will basically says that you need to divide up the financial assets equally, and it gives specific family heirlooms to each of you based on what you would’ve wanted.
Overall, things seem pretty straightforward, but that changes when your sibling gets a life insurance payout. They claim that they get to keep the total amount of the payout, even though it’s larger than the rest of the estate. You claim that they need to split it with you because it’s a financial asset and the will says that they need to divide it. Do they have to do so?
The beneficiary designation takes precedence
They likely do not have to divide that life insurance payout with you. What matters most is the beneficiary designation given to the life insurance company. If that designation only named your sibling – such as if they are older and they were the only one alive when the policy was purchased – then it is completely legal for the insurance company to only pay them. They’re not obligated to follow the instructions in the will.
If your parent had wanted to divide that asset between you both, there are steps they could’ve taken, such as updating the beneficiary designation. They also could have established a trust, named it as the beneficiary and let the trust pass the money on to you. But without these tools in place in advance, your sibling simply gets to decide if they want to divide that asset with you or not.
When situations like this become complex, it’s very important to understand your legal rights.