NJ’s SACCONE case allows use of Special Needs Trusts for PFRS Beneficiary

The New Jersey Supreme Court has issued a decision that will be very helpful to disabled children of retired NJ police and firefighters, called Saccone v Board of Trustees of the Police and Firemen’s Retirement¬† System (9/11/2014),¬†http://caselaw.findlaw.com/nj-supreme-court/1677772.html Under the rules for the Police and Firemen’s Retirement System (PFRS), upon the death of a member, the monthly survivor’s pension as well as a group life insurance benefit (called “survivor benefits”) are paid automatically to the surviving spouse and children of the member. The member can’t select a different beneficiary.

The problem for the Saccone family was that the member’s son Anthony has severe disabilities and depends upon Supplemental Security Income (SSI), Medicaid and other benefits.¬† Were he to start receiving the pension upon his father’s death, that income would disqualify him from these life-saving benefits. Mr. Saccone wanted to designate Anthony’s Special Needs Trust to receive the pension benefits. All of these means-tested programs provide that assets which are payable into, or held by, a qualified Special Needs Trust cannot be counted as assets. In this way, the assets are preserved for special needs to supplement the governmental benefits being received.For instance, services through the NJ Division of Developmental Disabilities (DDD) are only available to individuals who qualify for Medicaid.

The Supreme Court held that for all intents and purposes, Anthony’s Special Needs Trust could substitute for him as recipient of the pension, because the Trust is strictly for his sole benefit (and upon his demise any excess would be paid back to the State of New Jersey), and to disallow this mechanism would cause a harsh result not in keeping with State policy to support people with disabilities.

Careful planning for your estate includes careful management of your beneficiary designations. If you have a family member with disabilities, these considerations should be built into your estate plan.

For legal advice on estate planning, Special Needs Trusts and other issues concerning disability benefits, call 732-382-6070

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