Special needs trusts for other public benefits?

By November 15, 2010Uncategorized

As you know, special needs trusts are designed to provide support for people with a disability without jeopardizing their eligibility for public benefit programs such as SSI or Medicaid.  But what about eligibility for other public benefit programs; is it possible that a special needs trust could also help preserve eligibility for a benefit such as federal housing assistance?  In a story out of Washington state, a lawsuit between Diana Harding and the Spokane Housing Authority is examining precisely this question.

Ms. Harding suffers from post-traumatic stress disorder, and received an inheritance of $60,000 from her father.  To protect her eligibility for SSI, upon which she relies to support herself and her two teenaged children, the inheritance was placed in a special needs trust.  This, of course, protected her SSI eligibility, but she received some news from the state housing authority that came as quite a shock.  According to the state agency, the trust payments, which she has used to improve her family’s quality of life, will cause her share of rent under the state program to increase by just over $300 per month.

Ms. Harding is worried that the increase in rent will cause her grave problems.  The special needs trust will not last forever, she knows, and the increased rent will put serious constraints on her ability to provide for her family.  In fact, her attorney is saying that this additional burden could actually cause Ms. Harding to end up homeless.  While it may really be that the housing authority would reduce the rent once the trust funds become depleted, these emotional appeals are nonetheless quite striking.

Special needs trusts have not traditionally been used for programs such as the federal housing assistance program.  But Ms. Harding’s case demonstrates that perhaps this type of policy should be considered.  It will be interesting to see whether the court agrees with Ms. Harding on this issue, and we will discuss this more as details emerge.