Introduction
Imagine this: You’re in your twenties, embarking on your career. You fill out a form at work, naming your live-in significant other as the beneficiary of your retirement account. Over time, your contributions grow. Fast forward 28 years – the relationship ended long ago, and you’ve lived a full life. Upon your death, that old beneficiary designation remains, entitling your ex-partner to your million-dollar retirement fund, leaving your family with nothing.
This isn’t a far-fetched scenario. It happened in a high-profile case involving Margaret Losinger, her ex-boyfriend Jeffrey Rolison, his estate, and his employer, Procter & Gamble. Here’s a closer look at this real-life story, the critical lessons we can learn, and how having a trusted advisor can protect you from such costly mistakes.
The Story Unfolds
In the 1980s, Jeffrey Rolison dated Margaret Sjostedt, and the couple lived together. Rolison, an employee at Procter & Gamble (P&G), enrolled in a profit-sharing and savings plan, naming Sjostedt as the sole beneficiary of his retirement account in 1987. The relationship ended two years later, and both moved on. Sjostedt eventually married, becoming Margaret Losinger.
However, Rolison never updated his beneficiary designation. He passed away in 2015 at age 59, single and childless, with no will or instructions for his assets. His retirement account, now worth $1.15 million, was still designated to Losinger.
Rolison’s brothers, Brian and Richard, were shocked to learn that Losinger was the beneficiary. Believing their brother wouldn’t have wanted his ex-girlfriend to receive his savings, they sued P&G and Losinger in 2017. After a four-year legal battle, an appeals court ruled on April 29, 2024, that Losinger was entitled to the money. Rolison’s family lost not only the retirement fund but also the legal fees and court costs.
Why Estate Planning Is Essential
This case underscores the importance of estate planning, regardless of wealth or age. Rolison wasn’t wealthy when he named Losinger as the beneficiary, nor likely when they broke up. Yet, lacking an estate plan and trusted guidance, his ex-girlfriend became wealthy, costing his siblings time and money.
At its core, estate planning ensures your assets pass to your chosen beneficiaries with minimal effort, cost, and complications. It also ensures your wishes are known and honored if you become incapacitated. The freedom to make these choices is paramount, and without an estate plan, the government will decide for you. Creating an estate plan allows your wishes to override the government’s plan for your loved ones and assets.
Beneficiary Designations in Your Estate Plan
Beneficiary-designated accounts, such as retirement accounts and life insurance, are integral to your estate plan. These designations take precedence over wills or trusts. In Rolison’s case, even a will wouldn’t have changed the outcome since beneficiary designations override other estate planning documents.
Beneficiary forms are powerful, dictating who receives your retirement accounts, life insurance policies, and bank accounts. If you haven’t updated these forms, the named person will receive the assets, regardless of your current wishes. Regularly reviewing and updating beneficiary designations is crucial to ensure your estate plan reflects your intentions.
Regular Reviews Prevent Costly Mistakes
Rolison’s case highlights the ease of forgetting beneficiary designations. Neglecting to update these accounts can lead to unintended consequences and legal disputes. His brothers argued that P&G failed to inform Rolison adequately about his beneficiary designation, claiming insufficient warnings in service provider changes and monthly statements.
However, the responsibility for keeping beneficiary information current lies with the individual. Most companies do not remind you to review beneficiary designations. Have you checked yours recently? If not, it should be a priority. The court ruled in favor of P&G and Losinger because the onus is on the individual to update beneficiary information.
The Importance of Accountability
Life is busy, and planning for death and incapacity often takes a back seat. But “later” could be too late. Death can happen at any time, making it vital to be prepared to avoid situations like Rolison’s family faced.
Having a trusted advisor ensures your plan is regularly reviewed and updated. Our Life & Legacy PlanningⓇ process includes check-ins and reviews, keeping your plan current. Unlike most lawyers, we remind you to update your plan, ensuring your family inherits your accounts, not an ex-partner from decades ago.
We Handle the Details for You
We handle the heavy lifting of planning for your death and incapacity, freeing you to focus on your family, work, and life. As a Personal Family LawyerⓇ Firm, we help you create a Life & Legacy Plan that keeps your loved ones out of court and conflict. Once your plan is created, you can rest easy knowing your wishes will be honored, your loved ones cared for, your property protected, and your plan updated throughout your lifetime.
If you’ve already created a Life & Legacy Plan with us, watch for reminders to review and update your plan. If you need to update your plan due to a life change, don’t hesitate to call us immediately.
Click here to schedule a complimentary 15-minute consultation to learn more.
FAQs
1. What is estate planning?
Estate planning ensures your assets pass to your chosen beneficiaries with minimal effort, cost, and complications, and your wishes are honored if you become incapacitated.
2. Why are beneficiary designations important?
Beneficiary designations dictate who receives your accounts, often taking precedence over wills or trusts. Regular updates are crucial to reflect your current wishes.
3. How often should I review my beneficiary designations?
Regular reviews are recommended, especially after significant life events, to ensure your designations align with your current intentions.
4. Can a will override a beneficiary designation?
No, beneficiary designations take precedence over wills and trusts.
5. How can a trusted advisor help with estate planning?
A trusted advisor ensures your estate plan is regularly reviewed and updated, keeping it current with your wishes and preventing costly mistakes.
