Remember When You Named Your 20 Year Old Girlfriend As a Beneficiary? He Didn't Either.

I came across an article on the Wall Street Journal with the title His Ex Is Getting His $1 Million Retirement Account. They Broke Up in 1989, and I immediately knew what this was about given it was in my estate planning wheelhouse.

In the 1980s, Jeffrey Rolison and Margaret Sjostedt dated. Now, nearly four decades after their breakup, Sjostedt might inherit his $1 million retirement account. This is because Rolison listed Sjostedt as the sole beneficiary of his workplace retirement account in 1987 and never updated it before his death in 2015.

Rolison’s brothers, who discovered Sjostedt’s claim weeks after his death, are contesting this in federal court against Procter & Gamble (P&G), Rolison’s former employer, to prevent Sjostedt, now Margaret Losinger, from receiving the funds. This case underscores the importance of beneficiary forms for retirement accounts, life insurance policies, and bank accounts, which can override wills even if filled out years ago.

The number of households aged 55 and older with workplace retirement accounts has significantly increased, with account values rising from $2.8 trillion in 2010 to $6.8 trillion in 2022. As more Americans accumulate retirement assets, disputes over these funds are becoming more common due to lost, outdated, or incomplete beneficiary forms.

Jeffrey Rolison and Margaret Losinger met in a park and later moved to Sullivan County, Pa., where she worked as a waitress and he at a P&G plant. After a year, Rolison named Losinger as his cohabitor on the beneficiary card. They broke up two years later, and she married and had two children. Rolison later lived with a new partner, Mary Lou Murray, until their separation in 2014. He died at 59, single and childless, with no will and no guidance on who should inherit his assets.

Brian and Richard Rolison, his surviving brothers, hired an estate lawyer to become co-administrators. The federal court directed P&G to award the retirement money to Losinger in 2020, putting the money in escrow while the brothers pursued claims. In 2021, the court ruled Murray was not entitled to the money as a spouse. The brothers have filed a motion for reconsideration and an appeal.

Employee-benefits lawyers suggest that plans could improve informing participants about old paper designation forms, but the responsibility lies with account holders. Workplace health and welfare plans require annual re-enrollment, forcing workers to update their choices. However, retirement plans usually do not have this process, leading to forgotten designations.

Rolison had named his mother and Murray as beneficiaries on his workplace life insurance benefits, later removing Murray. With no named beneficiary, the life insurance proceeds went to the estate. His brothers believe this was Rolison’s intention for the retirement funds.

The brothers sold Rolison’s BMWs to pay for the funeral, and the cats were given to twin nieces. Murray received a small investment account in her name, and the brothers split the life insurance and house proceeds. Meanwhile, Rolison’s retirement savings remain in money-market funds, awaiting distribution.

Given how much money is now held in workplace retirement accounts, this will become a more common occurrence as people age, so it’s best practice to review these periodically, especially whenever there has been a major life change.

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