A cautionary tale on inherited retirement accounts and outdated beneficiary forms
Jeffrey Rolison and Margaret Sjostedt dated in the 1980s, and now, nearly 40 years after their breakup, she could inherit his $1 million retirement account.
According to reporting from the Wall Street Journal, this potential inheritance stems from Rolison naming Sjostedt as the sole beneficiary of his workplace retirement account on a handwritten form in 1987. He never updated the beneficiary designation, and following his death in 2015, she remains listed as the beneficiary.
However, Rolison’s brothers are contesting Sjostedt's claim to the money. They were surprised to learn, just weeks after his death, that she was the beneficiary, as conveyed by their estate lawyer. “We were shocked,” said Brian Rolison, one of the brothers and a mechanic.
The brothers have been in a legal battle against Rolison’s former employer, Procter & Gamble, trying to prevent the payout to Sjostedt, now known as Margaret Losinger. This dispute highlights the critical importance of beneficiary forms for retirement accounts, life insurance policies, and bank accounts. Often, these forms can override a will, even if they were completed decades earlier.
Retirement account distributions after death
As Americans accumulate significant retirement assets, disputes over these accounts are increasingly common, according to legal experts. Beneficiary forms are frequently lost, outdated, or incomplete, leading to unexpected outcomes for both beneficiaries and families.
Federal law mandates that employers generally distribute retirement accounts to the last recorded beneficiary or to a surviving spouse if no waiver is in place. This could mean a name listed on a decades-old form, as in Rolison's case, or a name entered in an online system. Some employer plans, including Procter & Gamble’s, have not yet integrated old paper forms into their digital records, adding further complexity to the situation.
“Inertia has the upper hand,” noted Norman Stein, a law professor at Drexel University and senior policy adviser at the Pension Rights Center, told the Wall Street Journal.
How a decades old ex-girlfriend ended up with an inheritance
According to court documents, Rolison met Losinger, who goes by Peggy, at a park where they were playing Frisbee, and the two began dating in their early 20s. Later, they moved to Sullivan County, Pennsylvania, where she worked as a waitress, and he took a job at a Procter & Gamble plant that produces Pampers diapers and Bounty paper towels.
In 1987, a year after starting his job, Rolison enrolled in the Procter & Gamble profit-sharing and savings plans and filled out a beneficiary card, naming Peggy as his cohabitor. Peggy moved out two years later, married someone else the following year, and had two children, according to court documents. Then in 2015, when Rolison passed away, his retirement plan conducted an investigation to identify the beneficiary on various accounts.
In Rolison's case, Procter & Gamble (P&G) faced three potential claims to his retirement funds. Losinger, along with Rolison's brothers, each argued that they were entitled to the balance. P&G also included Mary Lou Murray, Rolison’s longtime partner and co-worker, as a potential claimant under common-law spouse rights.
In 2020, a federal court directed P&G to award the funds to Losinger. However, the money was placed in escrow while the brothers pursued legal claims against both P&G and Losinger. In 2021, the court ruled that Murray was not entitled to the funds as a spouse.
The brothers contended that P&G breached its fiduciary duty by failing to adequately inform Rolison about his beneficiary designation. P&G argued that it had provided warnings during service provider transitions, on its website, and in Rolison's monthly statements, which included notices such as: “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.”
The estate claimed that these standard notices were insufficient. Even if Rolison had seen the messages, the brothers argued that he might have reasonably assumed he had no beneficiaries on record, meaning default rules would apply, and the funds would go to his estate.
Rolison had previously named his mother and Murray as beneficiaries of his workplace life insurance benefits, later listing only Murray after his mother's death. When Murray moved out, he removed her as well. With no named beneficiary, the life insurance proceeds went to his estate. The brothers believe this is what Rolison intended for his retirement funds as well.
To cover funeral expenses, Brian and Rick sold Rolison’s BMWs, while his two cats were given to their twin nieces. Murray received a small investment account that had her name on it. The brothers split the workplace life insurance proceeds and the house.
Meanwhile, Rolison’s P&G retirement savings remain in money-market funds, awaiting final distribution.
A cautionary tale on outdated forms
Regularly reviewing your account beneficiaries should be an essential part of your financial and estate planning. However, certain life events and changes in your accounts require immediate attention.
Events like marriage, divorce, the birth of a child or grandchild, or the loss of a spouse or child can all necessitate updates to your beneficiary designations. Keeping these up to date ensures that your assets are directed to the intended recipients and that no one important is unintentionally left out.
Additionally, whenever you close an account and transfer your money to a new one, it’s crucial to designate your beneficiaries again. For instance, if you’ve recently rolled over a 401(k) from a previous employer or moved an existing IRA to a new financial institution, your beneficiary designations won’t automatically transfer with your assets. Fortunately, updating your beneficiaries is often straightforward and can typically be done online or by filling out a form.
If you’re unsure about how to designate your beneficiaries, consulting with an attorney or estate planner can help ensure your final wishes are honored.
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