Remember that guy or gal you dated then broke up with in the 80’s? I know, I know, I’d like to forget him too.
Could that old flame get some of your money when you die? Remarkably this scenario is playing out now in federal court.
You can read the whole fascinating story in the Wall Street Journal. (non-paywall link)
From the article:
“Jeffrey Rolison and Margaret Sjostedt dated in the 1980s. Now, almost 40 years after they broke up,she stands to inherit his $1 million retirement account.”
In 1987 Rolison listed Sjostedt on a handwritten 3×5 card (pictured below) as “cohabitor” and the sole beneficiary of his Procter & Gamble workplace retirement account.
She moved out two years later and got married to someone else a year after that.
He never changed the designation.
Complicating matters further:
“Some employer plans, including Procter and Gamble, haven’t
integrated the old paper forms into their online systems.”
Rolison later lived with a new partner until they separated in 2014. He died in 2015 at age 59. He was single and childless. He had no will.
Standing in the way of the P&G payout are Rolison’s brothers. They don’t think he could have possibly intended to leave the money to his former girlfriend Margaret.
The brothers have been fighting his former employer, Procter & Gamble, in federal court to keep the retirement money payout out of the hands of Sjostedt, now Margaret Losinger.
“The battle over Rolison’s money is a stark reminder that the
beneficiary forms on retirement accounts, life-insurance policies and
bank accounts matter. In most cases, they trump the will
even if they were filled out decades prior.” (Emphasis mine)
Said another way: It does not matter what your will says!
The article goes on:
“….disputes over who gets the money are on the rise, lawyers say. The beneficiary forms are often lost, out of date or incomplete, leading to windfalls for some and disappointment for others.”
Under federal law, these workplace retirement accounts must be paid out to the last recorded beneficiary. If there is a surviving spouse, he/she will be paid unless the surviving spouse filed a waiver previously.
The article goes into detail describing the twists and turns of the court case brought by the brothers. The court awarded the money to the former girlfriend Losinger in April.
The account remains escrowed while the lawyer for the brothers files a motion for reconsideration and an appeal.
It’s a remarkable story with an important take-home message: Check your beneficiary designations!
To do this, begin by making a list of all your retirement plan accounts, annuities, and life insurance policies. Then go down the list and check the beneficiary designations for each one. Bank accounts can typically be set up with beneficiaries using “Transfer-on-Death” designations. Your heirs will thank you.
