Court OKs Trusts for Disabled Kids of Cops and Firefighters

For Plaintiff-Appellant Thomas Saccone: Donald D. Vanarelli (Law Office of Donald D. Vanarelli, attorney; Mr. Vanarelli and Whitney W. Bremer, on the brief).

For Defendant-Respondent Board of Trustee of the Police and Firemen’s Retirement System: Melissa H. Raksa, Assistant Attorney General (John J. Hoffman, Acting Attorney General of New Jersey, attorney; Jeremy M. Vaida and Diane J. Weeden, Deputies Attorney General, on the letter briefs).

Ron M. Landsman, a member of the Maryland bar, argued the cause for amicus curiae Special Needs Alliance, Inc. (Schenck, Price, Smith & King, attorneys; Shirley B. Whitenack, of counsel; Mr. Landsman, and Ms. Whitenack, on the brief).

Daniel J. Jurkovic argued the cause for amici curiae National Academy of Elder Law Attorneys, New Jersey Chapter and Guardianship Association of New Jersey, Inc. (Mr. Jurkovic and Robert F. Brogan, on the brief).

John W. Callinan argued the cause for amicus curiae National Academy of Elder Law Attorneys, Inc.

Argued February 4, 2014 – Decided September 11, 2014

The following article by Michael Booth appeared in the New Jersey Law Journal on September 23, 2014.

New Jersey’s police officers and firefighters with disabled children will be allowed to direct their survivors’ benefits into special needs trusts without endangering additional benefits their children receive from the federal government, the New Jersey Supreme Court has ruled.

In a 4-2 ruling, the court said the statute governing who may receive survivors’ benefits from the Police and Firemen’s Retirement System (PFRS) should be liberally read so as to ensure beneficiaries are cared for as much as possible.

To read the statute otherwise, Justice Jaynee LaVecchia wrote for the majority, would thwart the public policy behind the system.

“There is a recognized strong public policy favoring the financial protection of a public employee’s family,” LaVecchia said in Saccone v. PFRS. “Public policy also favors a public employee’s ability to provide adequately for the well-being of his disabled child after his death.”

The court’s Sept. 11 ruling marks the end of a six-year battle for a retired Newark firefighter, Thomas Saccone, who is the father of a son with severe mental disabilities. Since 2008, Saccone has been seeking to have his son’s portion of his survivors’ benefits directed to a special needs trust after his death in order to ensure that his son continues to receive federal benefits.

Saccone’s requests had twice been rejected by the PFRS board of trustees and the Appellate Division, which said the PFRS enabling statute explicitly allowed for survivors’ benefits to be directed only toward a child or spouse, and that in 1967 the legislature eliminated the right of PFRS members to direct those benefits to other beneficiaries.

“It took an awful long time for common sense to prevail,” Saccone’s attorney, Westfield, N.J., solo Donald Vanarelli, said. “It didn’t seem like Mr. Saccone was asking for so much. It seems to me that he was just asking to help his son.”

The New Jersey chapter of the National Association of Elder Law Attorneys, the Guardianship Association of New Jersey and the Special Needs Alliance all participated as amici, arguing that PFRS members with disabled children receiving public assistance should be allowed to set up special needs trusts to protect the benefits the children already are receiving.

Under federal rules, public assistance can be reduced or lost if the person receiving those benefits sees an increase in income. Under normal rules, the children and spouses of PFRS members receive direct financial benefits on the death of the member. Those federal rules allow for the creation of special needs trusts to ensure that public assistance continues to flow to the recipient.

One of the elder law attorneys association’s lawyers, Rutherford, N.J., solo Daniel Jurkovic, said the rulings by the board and the Appellate Division “flew in the face” of the public policy goals of special needs trusts.

“There was a balancing of a number of issues, but the Supreme Court absolutely got it right,” Jurkovic, who also represented the guardians’ association, said.

Wall, N.J., solo John Callinan, who also argued on behalf of the elder law attorneys’ association, agreed.

Had the court affirmed the prior rulings, “those survivor benefits would actually amount to a bane for the child,” Callinan said.

Ron Landsman, who represented the Special Needs Alliance, said the court recognized that special needs trusts are necessary to protect a disabled child’s assets.

“For police officers and firefighters in New Jersey, this is now a settled issue,” said Landsman, who runs a firm in Rockville, Md.

LaVecchia said the prior rulings read the statute too harshly.

“The board’s strict view of how to implement the word ‘child’ in the survivors’ benefit statute when dealing with the circumstances of a Supplemental Security Income eligible disabled child of a PFRS retiree would have forced this class of beneficiary into an untenable situation,” LaVecchia said. “We reject as arbitrary, capricious and unreasonable the board’s determination that foists on disabled children of PFRS retirees, such as the child involved here, what is essentially a forfeiture of survivors’ benefits.”

LaVecchia said the board’s determination and the Appellate Division’s rulings would have forced the Saccones to decide whether to have their son take the survivor benefits or continue receiving public assistance, since he couldn’t have had both.

“That choice is harsh and unwarranted,” she said. “No legitimate public purpose is advanced by the board’s interpretation.”

Paying the child’s portion of the survivors’ benefits to a special needs trust specifically created to help the child is the same as paying the benefits directly to the child, LaVecchia said.

Chief Justice Stuart Rabner, Justice Faustino Fernandez-Vina and Appellate Division Judge Ariel Rodriguez, temporarily assigned, joined in LaVecchia’s ruling.

Appellate Division Judge Mary Cuff, also temporarily assigned, issued a dissent, which was joined by Justice Anne Patterson.

Cuff said she was “not unsympathetic” to Saccone’s situation, but added that the language of the statute was clear in stating that the benefits could be paid only to the child or spouse. Any other arrangements, she said, should be approved first by the legislature.

Justice Barry Albin did not participate.

A spokesman for the Division of Law, which represented the PFRS board, said officials there declined to comment.

My blog post on the NJ Supreme Court decision can be found here – https://vanarellilaw.com/saccone-supreme-court/
For additional information concerning special needs trusts and disability planning, visit:
https://vanarellilaw.com/special-needs-disability-planning/