The Frustrating Tale Of A Retired Firefighter Repeatedly Denied The Right To Plan His Estate To Benefit His Severely Disabled Child

Thomas Saccone is a retired Newark, NJ firefighter. He and his wife’s only son, Anthony, suffers from severe mental disabilities. Tom is a long-standing estate planning client of my law firm. Tom has shown himself to be a devoted husband and father who is relentless in his efforts to plan his estate in order to provide adequately for his wife and disabled son upon his death.

Anthony, Mr. Saccone’s severely disabled son, has been receiving public benefits based upon need, i.e., Supplemental Security Income (SSI) and Medicaid benefits, for many years. Both of these public benefits are critical in meeting Anthony’s care needs. In order to structure his estate plan to provide for Anthony without jeopardizing Anthony’s eligibility for vitally important needs-based public benefits, Mr. Saccone executed a Last Will and Testament containing a testamentary supplemental benefits trust (also known as a “special needs trust”) on Anthony’s behalf.

Mr. Saccone was approved for Police and Firemen’s Retirement System (“PFRS”) benefits effective December 1, 2000. In August 2008, by way of beneficiary designation, Mr. Saccone requested that the benefits to which his severely disabled son Anthony would be entitled upon Mr. Saccone’s death be distributed to the testamentary supplemental benefits trust established under Mr. Saccone’s will , to protect Anthony’s eligibility for public benefits. Those death benefits included the payment of pension benefits to the retired member’s widow/er and children (the “pension death benefit”).

In response to that request, the Division of Pensions and Benefits (the “Division”) advised Mr. Saccone that the Division,

could not comply with your request to pay a trust, instead all monthly benefits must be paid to a named beneficiary or the check could be sent to ‘in care of’ anyone designated to act as the trustee for the trust.

The Division also expressed its dim view (and fundamental misunderstanding) of Mr. Saccone’s request when it advised him that,

the Division cannot be a party to an effort to enable Mr. Saccone to continue to be eligible for public assistance by not reporting the benefit he receives as a beneficiary as taxable income.

There followed an exchange of correspondence and telephone calls in which Mr. Saccone requested reconsideration of the Division’s position. In response, by letter of October 27, 2008 and May 12, 2009, the Division clarified that its anticipated denial would be based upon the statutory definition of the term “child,” which does not include the term “trust.” The Division denied the reconsideration request and advised Mr. Saccone of his right to a formal appeal to the Board.

Mr. Saccone filed an appeal to the PFRS Board. On July 14, 2009, the Board responded that it “decline[d] to provide an advisory opinion” regarding whether the beneficiary designation would be accepted by the PFRS, because Mr. Saccone is still living. It followed,

The Board is aware that you are attempting to conduct estate planning…; however, this matter cannot be determined until the death of a member in accordance with N.J.S.A. 43:16A-12.1.

Mr. Saccone filed an appeal of this decision and requested an administrative hearing by letter of August 24, 2009. On September 22, 2009, the Board denied Mr. Saccone’s request for an administrative hearing, “since there are no questions of fact in dispute merely questions of law.”

The Board issued its Final Administrative Determination on October 16, 2009. It concluded that the statutes and regulations governing the PFRS “do not require the PFRS Board to provide an advisory opinion as requested.” It further cited the statutory definition of “child” and the regulation that provides that a retiree cannot designate a beneficiary for the receipt of accumulated pension contributions upon the retiree’s death, “because there is an automatic spousal/child benefit that is payable upon the retiree’s death,” and concluded that “the statutory requirements for payment of [pension] benefits are adequately defined and require no further explanation.”

Mr. Saccone filed a Notice of Appeal on December 7, 2009. Almost one year later, on November 15, 2010, we received the appellate court opinion which upheld the Board’s decision.  The appellate court held as follows:

The substantive issue raised by Saccone, whether a statute mandating compensation to a “child” of a retiree in these circumstances should be read as permitting the retiree to designate a trust for that child instead, is clearly hypothetical since Saccone and his wife are still alive and his son may or may not be alive when Saccone dies. Consequently, the opinion he sought was clearly advisory. … The governing legislation contains no provision requiring or even permitting the Board to provide purely advisory opinions to retirees. Thus, we cannot criticize the Board for applying in this administrative setting the same principles which we would apply in a judicial setting. Consequently, we are obliged to affirm the Board’s determination to withhold a ruling on the substantive question placed before it by Saccone. Affirmed.

In my opinion, it is unjust that Mr. Saccone, who worked for 30 years as a public employee in the Newark fire department, cannot rest easy knowing that the estate plan he established for his severely disabled son, who is receving SSI and Medicaid since he turned age 18 (now almost 40), is finalized. Why does he have to die not knowing if his son’s critical public benefits are protected?

The case is attached here – Saccone v. Police and Firemen’s Retirement System

UPDATED ON JULY 18, 2011: We gave the matter one last try and filed a Petition for Certification to the Supreme Court of New Jersey on December 3, 2011. Today, I received wonderful news: Mr. Saccone’s Petition for Certification was granted, the judgment of the Appellate Division was “summarily reversed,” and the matter was “remanded to the Board of Trustees of the [Police and Firemen’s Retirement System] to decide the case on the merits.” Hopefully, this time around the PFRS will make the right decision and permit Mr. Saccone to change the beneficiary designation so that the benefits his severely disabled son Anthony would be entitled upon Mr. Saccone’s death can be distributed to the testamentary supplemental benefits trust established under Mr. Saccone’s will.

The Supreme Court decision is annexed here – Supreme Court Petition for Certification

UPDATED ON MARCH 19, 2013: A lot has happened in the case since the last update. On remand, the PFRS Board again concluded that Tom was not permitted to designate the special needs trust as a beneficiary of his public pension death benefits. Tom again appealed to the Appellate Division of the New Jersey Superior Court, which again affirmed the  Board’s decision.  We then filed a second Petition for Certification to the New Jersey Supreme Court. On March 13, 2013, the Supreme Court again granted our Petition for Certification, and will consider the case on the merits. I blogged about the recent developments in the Saccone case here.