One of the main purposes of a LOSAP is to reward those who volunteer their time at the local fire department or ambulance. In the overwhelming majority of cases, this means paying the volunteer when he/she reaches the age of entitlement.
However, a provision must be made in the event a volunteer dies before reaching the entitlement age, or before being paid all of his/her accrued benefit. This means that volunteers should designate a beneficiary to be paid any benefit that may still remain due at death.
Under the NY State General Municipal Law that governs LOSAP, if there is no beneficiary designated the death benefit must be made payable to the volunteer's estate. That can really create headaches, in particular if the volunteer doesn't have a significant amount of assets, including the LOSAP. In this case, a family member or friend must go through the process of being named the administrator and then distributing the assets of the estate. This certainly will take up a significant amount of someone's time, and some or all of that time may require the assistance of an attorney. In that case, legal fees, though necessary, will dwindle the available funds. If the volunteer had any debt, the creditors may get the proceeds of the LOSAP death benefit before any family members. As you can see, the end result could be that a death benefit may not ever get to an intended family member or friend.
If you are reading this and you are a volunteer, have you checked that your beneficiary designations are up to date? When is the last time you reviewed them? Is it possible you have an ex-spouse or a deceased parent as the beneficiary? Ideally, your annual participant statement would include your beneficiary so you have a once-a-year reminder of that designation. If your annual participant statement does not include your beneficiary, contact the sponsor to request a copy of your form or at a minimum the names of your designated beneficiaries. Then you can determine if they should be updated.
If you are an official of a local government sponsor of a LOSAP, are the beneficiary designations being printed on the annual statements? Are those annual statements being provided to all participants, including mailing them to the former members with a vested benefit? We know how frustrating it can be to try and chase down volunteers who promise to complete forms later and never do. But keep at it. Note the file when an attempt was made. Do what you can to educate and encourage. One recommendation we make is to include that form with the new member application. If you get that form up front, at least you have a designation.
We will continue to explore this issue in later posts.