Who is the death beneficiary of your assets? Many of us forget to keep track of our beneficiary designations as the years go by and life gets busy. But that is a big mistake: keeping beneficiary designations current is an essential part of successful estate planning. Read on for a recent case out of Pennsylvania that shows just how wrong things can go if you fail to do so.
When Jeffrey Met Margaret
Jeffrey Rolison and Margaret Losinger met in 1978 while playing frisbee at a local park. Both in their twenties, they dated for a while and then moved in together. In 1986 Jeffrey began working at Procter & Gamble and joined the company’s profit-sharing plan. On April 28, 1987 he filled out the plan’s beneficiary card and designated Margaret, now his live-in girlfriend, as his sole beneficiary.
Two years later, the couple split up.
In 2015, more than three decades after the breakup, Jeffrey died. He was 59, still employed at Procter & Gamble, still unmarried – and Margaret was still listed as the beneficiary of his retirement plan.
What could go wrong? Plenty.
Who Inherits The Money?
Jeffrey’s brothers, Brian and Richard, are the administrators of the estate and were horrified to learn that his ex-girlfriend from long ago was going to inherit the funds. “We were shocked,” Brian told The Wall Street Journal.
But the brothers have not taken the news lying down. For the past ten years they have been fighting in federal court to prevent Procter & Gamble from distributing the funds to Margaret, now age 68. The account, $750,000 at the time Jeffrey died, has now ballooned to $1.5 million.
The brothers allege that Procter & Gamble neglected its fiduciary duty by not making it clear that their brother needed to review his beneficiary designation. They believe Jeffrey probably thought the funds would revert to his estate if he died. For example, when the company switched to an online system, it sent the following message to him: You don’t have any beneficiary designations online. Any prior beneficiary designations on file with the Plan will be retained by P&G, but are not viewable on this site.
Procter & Gamble claims it acted properly, alerting Jeffrey that his retirement account service provider had changed and sending him multiple online statements. David Gould, the attorney for the estate, argues that had the facts been made clearer and Jeffrey made aware that the funds would go to his ex-girlfriend, he would have take action. “He would have chosen his family,” Gould said. “He has brothers, nieces, nephews.” In fact, he did change beneficiaries on other accounts over the years as significant changes occurred in his life.
Under federal law, Procter & Gamble is required to pay out to the plan’s last known designated beneficiary. The court found for Procter & Gamble and Margaret in 2020 and 2024, but an appeal was filed by the estate in June 2024. As of this writing, the funds are still not distributed.
The Takeaway
It’s natural to have your heart broken when a love affair ends. But to have your retirement funds inherited by an ex-lover from decades before? It sounds bizarre, but as this case shows, it can happen when death beneficiary designations are neglected.
A word to the wise: Carefully analyze who you want to be the death beneficiary of each of your assets, and continue to monitor the designations regularly. At The Karp Law Firm, we discuss beneficiary designations with every new client, and continue to do so whenever we meet our clients for plan reviews, which we offer every three years. Call The Karp Law Firm for estate planning assistance at (561) 625-1100.
