Who are the death beneficiaries for your assets? Many of us forget to keep track of beneficiary designations as time goes by. However, keeping designations current is critical to ensure that the right people inherit your assets. That is why we review beneficiary designations with our clients from the first time we meet with them, and continue to do so at all our subsequent estate plan review meetings.
To illustrate how plans can go awry if you are not vigilant about your beneficiary designations, read this strange case out of Pennsylvania.
When Jeffrey Met Margaret
Jeffrey Rolison met Margaret Losinger in 1978 while they were playing frisbee at a local park. Both were in their twenties. They dated and ultimately moved in together. In 1986, while living with Margaret, Jeffrey began working at Procter & Gamble. He joined the company’s profit-sharing plan and on April 27, 1987 filled out the retirement plan’s beneficiary form, designating Margaret as his sole beneficiary.
Two years later, the couple split up.
In 2015, nearly three decades after the breakup, Jeffrey died of a heart attack. He was 59, still working at Procter and Gamble, and still unmarried. And he had never changed the beneficiary of his retirement plan.
Who Inherits The Money?
Under federal law, Procter & Gamble is required to pay out to the plan’s last known designated beneficiary. The administrators of his estate, his brothers Brian and Richard, were horrified to learn that their brother’s ex-girlfriend was the last known designated beneficiary. “We were shocked,” Brian told The Wall Street Journal.
But the brothers did not take the news lying down. Since 2015 they have been fighting in federal court to prevent Procter & Gamble from distributing the funds to Margaret, now 68. Jeffrey’s retirement account – $750,000 when he died – has now ballooned to $1.5 million.
The brothers allege that Procter & Gamble neglected its fiduciary duty by not making it abundantly clear to Jeffrey that he needed to review his beneficiary designation. For example, when the company switched to an online system, it sent the following message to Jeffrey: 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.
That message was ambiguous, claim the brothers, and likely led Jeffrey to believe the funds would simply revert to his estate if he died. David Gould, the estate’s attorney, argues that Jeffrey certainly would have taken action if he realized the money would go to his ex-girlfriend. “He would have chosen his family,” Gould said. “He has brothers, nieces, nephews.” He notes that when other significant changes occurred over the years in Jeffrey’s life, he always changed the beneficiaries on other accounts.
Procter & Gamble has claimed it acted properly, alerting Jeffrey that the retirement account service provider had changed and sending him multiple online statements.
The court found for Margaret and Procter & Gamble in 2020 and 2024, but an appeal was filed by the estate in June 2024. 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 seems bizarre, but as this case shows, it can happen when death beneficiary designations are neglected.
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 estate plan reviews, which we offer every three years. Call The Karp Law Firm for estate planning assistance at (561) 625-1100.
