You have illustrated one of the major shortcomings of Life Insurance and 401(k), and IRA beneficiary designations.
These plans make it real easy to make a simple beneficiary designation. And you can even name several people as beneficiaries. In the event of death the procceds of the policy or plan would go directly to the beneficiary and avoid going thru probate. But complicated designations, with all sorts of contingencies, are rare.
Why not name the kids as beneficiaries directly. If the beneficiaries are under 18 at the time of death, the money is held for them (with interest) until they are of age. And at 18 they get it; of course if they decide to get a new car instead of attend college, poof, there goes the money. Only a type of trust agreement would permit the money to be held and used only for schooling, etc., but that is expensive.
By the way, you should have at least a simple Will anyway. Even if you have very little. You do have furniture and personal items. And if you are in an accident, for example, and suffer for a week before passing on, the compensation for that suffering would be paid to your estate, and your heirs at law would have a more difficult time collecting.
