Opinion
DOCKET NO. A-1013-11T2
12-11-2012
CHRISTINA MAZYK, Plaintiff-Respondent, v. MARCOS COZZE, JR., Defendant-Appellant.
Ryan A. Dornish, attorney for appellant. Shana L. Taylor, Hunterdon County Counsel, attorney for respondent (Michelle A. Nodes, Assistant County Counsel, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Sapp-Peterson and St. John.PER CURIAM
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Hunterdon County, Docket No. FD-10-0224-08.
Ryan A. Dornish, attorney for appellant.
Shana L. Taylor, Hunterdon County Counsel, attorney for respondent (Michelle A. Nodes, Assistant County Counsel, on the brief).
Marcos Cozze, Jr. appeals from a September 19, 2011 Family Part order, ruling that income from his Self Settled Special Needs Trust (Trust) be recognized for the purpose of calculating his child support obligation. There is no dispute that the terms of the trust met the requirements of the Federal Medicaid statute, 42 U.S.C.A. § 1396p(d)(4)(A). In that section, Congress specifically permitted a Medicaid recipient to shield certain funds from consideration for his or her Medicaid eligibility by creating a supplemental needs trust, provided that after the recipient died any remaining funds in the trust were paid to the State "up to an amount equal to the total medical assistance paid on behalf of the individual." 42 U.S.C.A. § 1396p(d)(4)(A).
In this opinion, the terms "special needs trust" and "supplemental needs trust" are used interchangeably. They are also known as "OBRA '93 trusts," named after the Omnibus Budget Reconciliation Act of 1993 (OBRA '93), which permitted the creation of special needs trusts as a form of Medicaid planning. See 42 U.S.C.A. § 1396p(d)(4)(A); N.J.S.A. 3B:11-37a.
The Federal Medicaid statute, 42 U.S.C.A. § 1396p(d)(1), counts for purposes of "an individual's eligibility for, or amount of, benefits under a State plan," assets placed in a "trust established by such individual." However, subsection (d)(1) recognizes an exception for supplemental needs trusts created pursuant to 42 U.S.C.A. § 1396p(d)(4). Section (d)(4) defines two different types of trusts that may be created for a disabled person. These trusts are described in subsections (A) and (B):
(4) This subsection shall not apply to any of the following trusts:
(A) A trust containing the assets of an individual under age 65 who is disabled . . . and which is established for the benefit of such individual by a parent, grandparent, legal guardian of the individual, or a court if the State will receive all amounts remaining in the trust upon the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan under this subchapter.
(B) A trust established in a State for the benefit of an individual if--
(i) the trust is composed only of pension, Social Security, and other income to the individual (and accumulated income in the trust),
(ii) the State will receive all amounts remaining in the trust upon the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan under this subchapter, and
(iii) the State makes medical assistance available to individuals described in section 1396a(a)(10)(A)(ii)(V) of this title, but does not make such assistance available to individuals for nursing facility services under section 1396a(a)(10)(C) of this title.
[42 U.S.C.A. § 1396p(d)(4).]
Section (B), which permits Miller trusts, does not apply in New Jersey because New Jersey has adopted the medically needy nursing home Medicaid program. See N.J.S.A. 30:4D-3i(8). Only section (A) applies to New Jersey's Medicaid program.
Named after Miller v. Ibarra, 746 F. Supp. 19 (D. Colo. 1990), Miller trusts permit individuals to qualify for Medicaid benefits in states that have income caps for Medicaid eligibility. Individuals in those states can assign income to a Miller trust in order to avoid having the income counted against the cap. See L.M. v. Div. of Med. Assistance & Health Servs., 140 N.J. 480, 484-89 (1995) (discussing this State's then-existing income cap program and the use of Miller trusts). Once New Jersey ceased to use the income cap approach, and instead adopted the medically needy Medicaid program, Division of Medical Assistance and Health Services prohibited the use of Miller trusts to shelter income. See N.J.A.C. 10:71-4.11(h).
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Cozze contended before the Family Part judge, and Mazyk conceded, that a New Jersey court cannot order the Trustee of the Trust to make disbursements from the Trust for unpaid child support.
After analyzing the restrictions of the federal Medicaid statute and reviewing the record in light of the contentions advanced on appeal, we are satisfied the trial court's conclusions were correct and should be affirmed.
I.
The record discloses the following facts and procedural history.
Mazyk and Cozze had a brief relationship which resulted in the birth of Angelina Mazyk-Cozze on September 14, 2007. Cozze's paternity of Angelina was established by court order after genetic testing.
Prior to Angelina's birth, on July 21, 2007, Cozze was in a motor vehicle accident which resulted in his permanent brain injury. A lawsuit was filed on his behalf and a settlement of over $1,800,000 was reached in his favor. In November 2010, Cozze established, for his own benefit, the Trust with the net amount of the settlement, which he asserts was approximately $1,200,000.
On May 10, 2011, Mazyk filed a complaint for child support indicating that Cozze received a settlement award from his motor vehicle accident. She also applied and was found eligible for Temporary Assistance to Needy Families (TANF) on May 17, 2011. Shortly thereafter, counsel for the Division of Social Services (Division) requested that the court amend Mazyk's complaint to include the Division as an interested party pursuant to an assignment of rights signed by Mazyk in accordance with N.J.A.C. 10:90-16.2(b).
In a comprehensive written opinion, Judge Robert B. Reed noted that parents have a moral obligation and a legal duty to support their child. He further determined that the calculation of child support is governed by Rule 5:6A and its appendices. He referenced Appendix IX-B, which states under the heading "Gross Income," that gross income includes annuities or an interest in a trust, distribution from government plans, including social security, personal injury awards, and disability grants or payments (including social security disability). See Pressler & Verniero, Current N.J. Court Rules, Appendix IX-B to R. 5:6A at 2566-67 (2013).
Clearly, if Cozze had not established the Trust, but had retained the net proceeds of the settlement, that amount would be available to pay child support. However, Cozze elected to establish the Trust for his own benefit. The judge noted that the Trust documents provide that the Trustee has absolute discretion to make distributions for Cozze's needs. However, the judge further stated, distributions "can be used to pay for vacations, technology, cable television etc. and aside from the fact that it is inequitable to allow [Cozze] to partake in such luxuries while the parties' daughter is supported by the State, nothing prevents a determination that '[Cozze's] Special Needs' might include support for his daughter."
The judge recognized, and we agree, that there is no case law in New Jersey directly addressing the issue before us. However, the judge referenced two opinions in our sister states. In the first, Meyers v. Meyers, 2006-Ohio-5360 (Ohio Ct. App. 2006), the primary issue was whether distributions from a special needs trust satisfied the broad definition of gross income stated in the Ohio Rules of Court for child support computation, even though the distributions were not made directly to the mother who established the trust. The court determined that trust income, social security benefits, and other non-means tested disability benefits are expressly included as income for purpose of calculating child support.
Secondly, the judge addressed Mencer v. Ruch, 928 A.2nd 294 (Pa. Super. Ct. 2007). There, the court was called upon to determine whether income to a father from a supplemental needs trust to pay for his general living expenses and luxuries should be counted as income for purposes of calculating child support. The court determined that the starting point for calculation of child support obligations is a determination of each party's income available for support, including income generated by the trust. The court noted that "[s]imply put, the fact that Father has no ability to control his receipt of funds is not pertinent to whether the payments made for his benefit are income." Id. at 298. Thus, the court concluded that the payments from the trust were a financial resource that should have been included in the calculation of the father's child support obligation. Ibid.
In Judge Reed's decision, he set forth his findings of fact and conclusions of law and stated that:
The Court's determination is that defendant's trust income and SSD shall be considered income for inclusion in calculations to determine defendant's child support obligations. Therefore, the Court orders the defendant and/or the trust to provide a trust accounting (of annual income only) to the Court in order to determine income to be included in defendant's child support obligations. Once provided with such, the matter will be referred to a Hearing Officer to run child support guidelines.
It is from that decision that Cozze appeals.
II.
Cozze argues the trial court erred as a matter of law because both federal and New Jersey law provide that a self settled special needs trust cannot be used to pay for support of another.
Before we examine Cozze's contentions, we set forth our standard of review. "The scope of appellate review of a trial court's fact-finding function is limited. The general rule is that findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998). Furthermore, due to the family courts' special jurisdiction and expertise in such matters, we defer to a family court's fact-finding. Id. at 413. We grant substantial deference to a trial court's findings of fact, which will only be disturbed if they are "'manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence.'" Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of N. Bergen, 7 8 N.J. Super. 154, 155 (App. Div.), certif. denied, 40 N.J. 221 (1963)).
"The trial court has substantial discretion in making a child support award. . . . If consistent with the law, such an award will not be disturbed unless it is manifestly unreasonable, arbitrary, or clearly contrary to reason or to other evidence, or the result of whim or caprice." Foust v. Glaser, 340 N.J. Super. 312, 315 (App. Div. 2001) (citations and quotations omitted).
Moreover, the trial court should consider all of the movant's assets, as
[i]t has long been the law of this State that courts have the authority to consider the assets and other financial circumstances of the parties in addition to their income when determining child support. The Legislature has specifically expressed its intent in that regard through adoption of N.J.S.A. 2A:34-23a. . . . [It is] clear [that] child support [is] based upon total family resources and all parents' resources
should be considered available for support of the children.
[Connell v. Connell, 313 N.J. Super. 426, 432 (App. Div. 1998) (citing Cleveland v. Cleveland, 249 N.J. Super. 96, 101-02 (App. Div. 1991)).]
Here, in order to take advantage of certain Medicaid benefits, Cozze voluntarily gave up the settlement assets by creating the self settled Trust. The trial judge recognized that those assets are not available to satisfy Cozze's child support obligations. However, the distribution of those assets is a resource which the trial judge appropriately considered available for support.
We find Cozze's remaining contentions concerning res judicata and collateral estoppel to be without sufficient merit to warrant discussion in this opinion. R. 2:11-3(e)(1)(E).
The decision of the trial judge, that Cozze's Trust income and SSD shall be considered income for inclusion in calculations to determine his child support obligations, is affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
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CLERK OF THE APPELLATE DIVISION