Doing estate planning with a life insurance policy typically just means naming the proper beneficiary. You can pick one person or multiple people. If you choose more than just one person, you can divide the policy up as you see fit. For instance, you could do a 50/50 split or choose to give one well-off child just 25% and give the other 75% to the child who needs it more.
No matter what you choose, doing this means that your life insurance policy never really enters your estate or goes through probate. A trust will not override that beneficiary designation. Neither does your will. All that matters is who you pick with the policy itself.
Now, you can decide not to name anyone at all. This means that the policy does just enter your estate when you pass away. It can then be divided in accordance with your will and the rest of your estate plan. Why would you want to avoid doing this by choosing a beneficiary?
There are a few reasons, one of which is that your debts have to get paid out of your estate. If you owe money and the life insurance gets added to the estate, the creditors can try to claim it. If you just name a beneficiary, they get the money regardless of how much debt you have — and even if there is outstanding debt left after the rest of your estate is depleted.
As you can see, it’s crucial to really understand all parts of your estate plan, how they interact together and what you can do to create the best plan for your family.