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  • Cindy Wysocki

A Gift to an Ex-girlfriend or an Outdated Beneficiary Designation?

Jeffrey Rolison worked hard throughout his life, saving diligently in his 401(k) plan with Procter & Gamble. Over nearly three decades, he built up a substantial nest egg of $754,006.54. But one crucial detail slipped through the cracks: his beneficiary designation. 

Back in 1987, when Jeffrey first enrolled in the 401(k) plan, he named his then-girlfriend, Margaret M. Sjostedt, as his beneficiary. Fast forward two years, and their relationship ended. Life went on, Jeffrey moved on, but his beneficiary designation didn't. 

Despite receiving numerous reminders from P&G over the years to review and update his beneficiary information, Jeffrey never took action. P&G even transitioned to an online system in 2007, making it easier than ever to make changes. But still, Jeffrey didn't update his beneficiary. 

When Jeffrey passed away in 2015, his outdated beneficiary designation became a significant issue. The substantial 401(k) balance was set to go to Margaret, now Margaret Losinger, even though their relationship had ended more than 25 years earlier. 

Jeffrey's estate took the matter to court1, arguing that P&G had failed to properly inform him about his beneficiary designation. However, the court ruled in favor of P&G, noting that Jeffrey had been repeatedly notified and had ample opportunity to make changes but chose not to do so. The judge concluded that P&G had fulfilled its fiduciary duty by informing Jeffrey of his options and the importance of updating his beneficiary designation. 

This ruling underscores a critical lesson for everyone: regularly reviewing and updating your beneficiary designations is essential. Life changes—such as marriage, divorce, the birth of a child, or the death of a loved one—should prompt an immediate review of these designations to ensure they reflect your current wishes. 

Jeffrey's story is a potent reminder that beneficiary designations are legally binding unless explicitly changed. This oversight can lead to unintended and often undesirable outcomes. To prevent such scenarios, make it a habit to review your beneficiary designations periodically, especially after major life events. 

In estate planning, it's the details that count. Don't let an outdated designation derail your plans and create unnecessary stress for your loved ones. Keep your beneficiary designations up to date to ensure your assets are distributed according to your wishes.  

For personalized assistance in reviewing and updating your estate plan, including beneficiary designations, contact our office today. We are here to help you navigate the complexities of estate planning to ensure your assets are protected and distributed according to your wishes. 

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