The Old Girlfriend and the 401(k) Windfall: A Cautionary Estate Planning Tale

Inside the Court Case

In Procter and Gamble v. Estate of Jeffrey Rolison, the decedent began participating in the P&G 401(k) in 1987, when he named his then-girlfriend as beneficiary. The couple ended their relationship in 1989, but the decedent never changed his beneficiary designation. As a result, when he died in 2015, his ex-girlfriend received the account balance of about $754,000 as designated beneficiary.

P&G produced evidence to show that, over the years, the company had sent the decedent information about how to change his beneficiary. That information included disclosures about transitioning to an online system in 2007 (it became fully effective in 2015). Those disclosures often recommended reviewing his beneficiary designations.

The decedent’s estate alleged that P&G, as plan sponsor, violated its fiduciary obligations by failing to disclose material information to the decedent about the specific identity of his designated beneficiary. Instead, the estate maintained that P&G provided only generic information about beneficiary designations.

The Decision

According to the ruling in the U.S. District Court for the Middle District of Pennsylvania, the plaintiff was required to prove four elements to succeed on the breach of duty claim: (1) P&G had acted in a fiduciary capacity, (2) P&G did not adequately inform the decedent of his beneficiary designation, (3) P&G knew that it had created confusion by that failure to inform and (4) the decedent relied on P&G to his detriment.

The court granted P&G’s summary judgment motion, finding that the decedent had logged into his online account multiple times in the intervening years (his original designation in 1987 was made on paper) and must have known that he had not designated a beneficiary through the online system.

The court further found that the decedent knew that he had to take steps to change his beneficiary, knew that he could do so online and failed to make the change. In other words, there was no evidence to show that the decedent was confused or detrimentally relied on any misrepresentation or omission by P&G.

The court also found no evidence that P&G’s disclosures over the years had been confusing. The records in the case show that P&G provided many disclosures about his not designating a beneficiary online and, without that designation, the paper designation from 1987 would continue to be valid.

While it is still possible that the decedent intended for his former girlfriend to receive his 401(k) balance, it seems unlikely given the lengths his estate went through to challenge that result. This case should serve as an important reminder that courts will almost always uphold a valid beneficiary designation even if it seems that the decedent would have chosen a different result when alive.

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