Could You Fall Victim to This Million-Dollar Mistake?
Picture this: You’re in your twenties, embarking on your career journey. You complete a form at work, designating your live-in partner as the beneficiary of your retirement account. As you diligently contribute, your account starts to grow. Now, fast forward 28 years—you've moved on from that relationship, experienced life to the fullest, and eventually passed away. But you never updated that beneficiary designation, leaving your ex-partner entitled to your million-dollar retirement fund while your family receives nothing.
Sounds unbelievable? Unfortunately, it's not. This scenario unfolded in a high-profile case involving Margaret Losinger and her former partner, Jeffrey Rolison, alongside Procter & Gamble, the company he was employed with for those 28 years.
Let’s take a deeper look at this startling true story, the valuable lessons it imparts, and how having a trusted advisor throughout your life can safeguard you from making a million-dollar mistake—or any other oversights you may be unaware of.
What Unfolded?
Back in the 1980s, Jeffrey Rolison and Margaret Sjostedt were a couple navigating life together. While working at a Procter & Gamble (P&G) plant, Rolison decided to enroll in a profit-sharing and savings plan, naming Sjostedt as the sole beneficiary of his retirement account in 1987. Two years later, their romantic journey came to an end, and they both moved on, with Sjostedt eventually marrying and adopting the surname Losinger.
Yet, Rolison never took the crucial step of updating his beneficiary designation. In 2015, at just 59 years old, he passed away, leaving behind no will and no clear directives for his assets. To his family's astonishment, his retirement account had swelled to a staggering $1.15 million, still designated for Losinger.
When Rolison’s brothers, Brian and Richard, discovered that their brother’s ex-girlfriend was set to inherit his retirement savings, they were taken aback. They were convinced that Rolison would never have intended for Losinger to benefit from his hard-earned savings. In 2017, the brothers launched a lawsuit against P&G and Losinger, hoping to redirect the funds to Rolison’s estate.
On April 29, 2024, an appeals court handed down a ruling: Losinger was entitled to the money. After four arduous years in court, Rolison’s family lost not only their claim to the million-dollar retirement fund but also the legal fees and court costs accrued during the battle.
Because we know you wouldn’t want a similar fate to befall your loved ones, keep reading…
Why Even "Simple Estates" Need Expert Guidance
Before we dive deeper, let’s clarify what estate planning really entails, how beneficiary accounts come into play, and why having a trusted advisor is crucial—even if you believe you don’t have a complex estate or don’t think you need one.
What is Estate Planning?
Many people think estate planning is just for the wealthy or elderly. This assumption is far from the truth. Take the case of Jeffrey Rolison: he wasn’t wealthy when he named his ex-girlfriend, Margaret Losinger, as the beneficiary of his retirement account. Despite not having a large estate, his failure to update his beneficiary designation resulted in his ex inheriting a substantial sum and left his family grappling with legal and financial repercussions.
At its core, estate planning is about ensuring that your assets go to the people you choose, in the manner you want, with minimal effort, cost, and hassle. It also ensures that if you become incapacitated, your wishes are respected and carried out with the least cost and maximum privacy.
Most importantly, estate planning is about exercising your choices and maintaining your freedom. If it matters to you to control what happens to your assets and loved ones, then an estate plan is essential. Without one, the government will make those decisions for you. By creating an estate plan, you ensure your wishes take precedence over any default government plan.
The Role of Beneficiary-Designated Accounts in Your Estate Plan
Beneficiary-designated accounts—such as retirement accounts and life insurance policies—play a crucial role in your estate plan. These designations have the power to override both the government’s default plan for your assets and any instructions you may have outlined in your will or trust, should you have created one.
The case of Jeffrey Rolison illustrates this point: despite not having a will, the absence of one wouldn’t have changed the outcome. Beneficiary designations take precedence over any will or trust, regardless of when they were made.
Beneficiary forms are significant legal documents that determine who receives your retirement accounts, life insurance policies, and bank accounts. Often, they hold more weight than your will. If you filled out a beneficiary form years ago and haven’t made any updates, the individual listed on that form will most likely inherit those assets, regardless of your current intentions.
The key takeaway from the Rolison/Losinger case is that beneficiary accounts are essential to your estate plan and should be regularly reviewed. That’s why our Planning Session include a comprehensive review of all your accounts, beneficiary designations, and an inventory of your assets, along with ongoing updating programs to ensure everything stays current.
The Importance of Regularly Reviewing Your Accounts and Beneficiary Designations
The case of Rolison underscores the ease with which beneficiary designations can slip from our minds, especially when they were established years ago. This oversight can result in unintended consequences and legal disputes for your loved ones.
In Rolison’s situation, his brothers contended that Procter & Gamble (P&G) failed to adequately inform him about his beneficiary designation. They argued that the company did not provide sufficient warnings when it switched service providers or in its monthly statements. However, it’s important to note that most companies do not proactively remind you to review and update your beneficiary accounts. When was the last time your bank prompted you to check the beneficiary designations on your checking account? What about your life insurance provider? If they haven’t reached out, have you taken the initiative to regularly check your beneficiary designations? Given the busyness of life, is this a priority for you?
If it’s not, it should be. The court's ruling highlighted that the responsibility for maintaining up-to-date beneficiary information ultimately lies with the individual. Regular reviews of your accounts and beneficiary designations are essential to ensure your assets are distributed according to your wishes, avoiding potential conflicts and confusion for your family.
The Power of Accountability in Estate Planning
Life can be overwhelming, and with so many responsibilities, it's easy to push thoughts of estate planning and beneficiary accounts to the back of your mind. You might think, "I'll take care of it later," but the reality is that "later" could come sooner than you expect.
We all know that death is a certainty, yet the timing remains uncertain. It doesn’t discriminate based on age or busyness. I share this not to instill fear but to emphasize the importance of being prepared, ensuring that what happened to the Rolison family doesn’t happen to yours. Planning for death doesn’t have to be daunting; in fact, it can bring you a sense of purpose and peace of mind, knowing you’ve made the right choices for your loved ones.
This is where having a trusted advisor makes all the difference. My Planning Session includes regular check-ins and reviews of your estate plan and beneficiary accounts, so you never have to think about it alone. Unlike many estate planning lawyers, I prioritize keeping you accountable and will remind you to update your plan regularly. As life evolves, I’ll ensure your estate plan reflects your current wishes, so your family inherits what you intended, not an ex-girlfriend from decades ago. Together, we’ll navigate the complexities of estate planning, safeguarding your legacy for those you truly care about.
We Handle the Heavy Lifting for You
When it comes to planning for your future and ensuring your loved ones are taken care of, we’re here to do the heavy lifting. As a Personal Family LawyerⓇ Firm, we empower you to focus on your family, work, and personal well-being while we craft a comprehensive Estate Plan. Our goal is to help you avoid court battles and family disputes, ensuring that your wishes are honored when it matters most.
Once your plan is in place, you can breathe easy knowing your loved ones will be cared for, your assets protected, and your plan will be updated as your life evolves. If you’ve already worked with us to start your Planning Session, watch for our reminders to review and update your plan regularly. If you’ve experienced a life change and know it’s time for an update, don’t hesitate to reach out to us right away.
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This article is a service of 20WestLegal LLC. We don't just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love. That's why we offer a Planning Session, during which you will get more financially organized than you've ever been before and make all the best choices for the people you love. You can begin by calling our office in Sudbury, Massachusetts today to schedule an Estate Planning Session and mention this article to find out how to get this $750 session at no charge.
The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.