Thomas Saccone was a retired New Jersey firefighter and a member of the Police and Firemen’s Retirement System (PFRS).  He received a pension and other benefits, and his wife and son were entitled to receive survivors’ benefits if Saccone predeceased them.  The benefits would not pass through Saccone’s estate.  Saccone’s son, Anthony, suffered from a severe mental disability and received supplemental security income (SSI).
Saccone wanted to designate Anthony’s SNT as beneficiary to allow Anthony to receive Saccone’s death benefits without jeopardizing Anthony’s eligibility for public assistance. Saccone’s attorney wrote to the Division of Pension and Benefits (Division) seeking reassignment of the survivors’ benefits from Anthony to an SNT in Anthony’s name.  The Division denied the request stating that, under the plain language of state law, Saccone could not change the beneficiary of his death benefits.  Saccone filed an appeal.
Based on its review of the statute, the Board concluded that PFRS survivors’ benefits vested automatically in the decedent’s spouse and children upon the death of the member. The state Supreme Court reversed the decision.  The Court held that the disabled son of a retired member of the PFRS could have his survivors’ benefits paid into a first-party “special needs trust” (SNT) created for him under federal law.
The Court stated that the Board’s strict view of how to implement the word “child” in the survivors’ benefits statute when dealing with the circumstances of a SSI-eligible disabled child would have forced this class of beneficiary into an untenable situation.  Both the federal government’s SSI and related medical assistance programs and New Jersey’s statutes permitted the use of self-settled SNTs. The Court rejected the Board’s interpretation that foisted on disabled children of PFRS retirees what was essentially a forfeiture of survivors’ benefits.
(Saccone v. Board of Trustees of the Police and Firemen’s Retirement System, 2014 WL 4450553 (September 11, 2014))
This decision provides a basis for state public employees with disabled children to designate a special needs trust for that child as beneficiary to receive the child’s share.
Contact us for help in setting up a special needs trust for your child or designing the best beneficiary designations for them.