Old Beneficiary Form Gave His Ex $1 Million
Jeffrey and Margaret dated in the 1980s. Now, almost 40 years after they broke up, she stands to inherit his $1 million retirement account.
The reason Margaret will get Jeff’s money is that in 1987, Jeff listed his girlfriend, Margret, on a handwritten form as the sole beneficiary of his retirement account. He never changed the beneficiary designation and died in 2015.
Standing in her way are Jeff’s brothers. They don’t think he could have intended to leave the money to Margaret.
“We were shocked,” said his brother, Brian, a mechanic.
The brothers have since been fighting his former employer, Procter & Gamble, in federal court to wrest the retirement money out of Margaret’s hands.
Disputes on the Rise
The battle over Jeff’s money is a stark reminder that the beneficiary forms on retirement accounts, life-insurance policies and bank accounts matter need to be updated. In most cases, these beneficiary designation forms trump the will even if they were filled out decades earlier.
The beneficiary forms are often lost, out of date or incomplete, leading to windfalls for some and disappointment for others.
Under federal law, employers are generally required to pay out these retirement accounts to the last recorded beneficiary, or a surviving spouse if the spouse hasn’t filed a waiver.
A Seven Figure Sum
Jeff died at 59, single and childless. He had no will and no guidance on who should get his home, collection of used BMWs or two cats. The ex-girlfriend, now 68, stands to inherit the entirety of Jeff’s P&G plan accounts. The total came to nearly $750,000 when he died and had grown to $1.15 million by 2020.
The lesson learned from Jeff’s estate is to get a paper copy of your beneficiary designation for each and every IRA account and review your beneficiaries. Generally, people name their spouses as the primary beneficiary and their children as their secondary beneficiaries. Where is your beneficiary designation form?
Update your beneficiary designation form today. Call the “Trust Doctor,” W. Bailey Smith, at (949) 833 – 8891.
