It is no secret that a lot of people in America are living alone and while many have been in one or more serious relationships those never culminated in marriage. Meanwhile, these people accumulate assets but often don’t pay enough attention to what will become of them if the Grim Reaper comes for an early visit. If you marry someone, there are all kinds of laws that help to define and guide your relationship. If you don’t, you’re just kind of out there in the atmosphere.
The Philadelphia Inquirer tells us the story of Jeff Rolison, a fellow whose life story would otherwise not be newsworthy. Rolison grows up around Bristol, PA and like many of his neighbors takes a job at the local Proctor & Gamble factory. He finds a woman he likes and they apparently live together for two years. In 1987 when the boss or the union agent came around with papers telling him he participates in the P&G Retirement Plan he writes in his girlfriend’s name as beneficiary should he die.
Life goes on and Jeff and girlfriend Margaret move to Tunkhannock, where P&G also makes paper products for the rest of us. Margaret takes a job as a waitress. Alas, the relationship falls apart. Jeff moved on and found Mary Lou in 1991. They didn’t marry either, but their relationship did subside until 2014. Along the way the boss or the union rep came around with paperwork for a P&G life insurance plan, so this time Jeff wrote in Mary Lou’s name as beneficiary. When they split Jeff did change that beneficiary designation, but he never did anything about the one naming Margaret the retirement plan survivor beneficiary.
You probably know where this is going. In 2015 Jeff Rolison was preparing to retire when he had a heart attack and died. At the time of his death, he had accumulated $750,000 in his retirement plan. Margaret had moved on, married another guy and certainly was not expecting to “inherit” (actually an incorrect term) from her relationship with Jeff. But when you sign a beneficiary designation and then never bother to change it, the assets got to the person named on the paper. No one comes around to ask: “Hey, are you still OK with the ex-girlfriend getting the motherload of your stuff if you die?” For all we know Jeff might have said she would get nothing because he was going to live off that money in retirement. Or perhaps he would have said: “ I never dated Snow White but aside from her Margaret was the fairest of them all and she deserves the money.”
Jeff’s family has taken a run at this retirement fund claiming it should be an asset of his estate and divided among his mourning family members. They say P&G should have done more to remind Jeff that Margaret was kaput and now even Mary Lou was in the rear view mirror.
Retirement issues like this are federal law matters so when they saw competing beneficiaries (Margaret vs. Jeff’s family) P&G filed a suit to say: “We know it’s Jeff’s money, but a court needs to decide this dispute.” In April, the U.S. District Court ruled that the 1987 handwritten beneficiary designation of Margaret remained valid and that the plan participant (i.e., Jeff) had 28 years to change it. The ruling of the United State District Court notes that P&G did advise its plan participants (including Rolison) to make certain they named the right beneficiary but it is under no duty to seek out a participant individually and ask them to double check the person named.
Some single people are scrupulous about these kinds of matters. We all have or know of an aunt who is always doting over nieces and nephews and who has made them beneficiaries of her assets. Then there are people like Jeff who eschew contingency planning. The moral is: “Don’t become a Jeff unless you want Margaret to inherit your stack too.”
We should note for married folk that the federal law intervenes when you are married. Under the Retirement Equity Act, your federally regulated plans mandate that your surviving spouse IS the death beneficiary of your federal retirement assets (401K, 403B but NOT IRAs) by default unless that spouse signs a waiver of that right. Had Jeff married Mary Lou and not been divorced at the time of his demise Mary Lou would have gotten the $750,000 (now a million because of a generous stock market). That’s true even if Jeff had filled out daily beneficiary designation forms and given them to P&G naming his sister, his brother, his blackjack dealer or whomever as the person he wanted to get the million. These forms matter and these assets are not part of your estate unless you name your plan beneficiary as “My estate” or “Per My Last Will.”
Here’s the case:
