CERTAIN LIMITATIONS ON SPECIAL NEEDS TRUSTS
Last year a case out of the Western District of Massachusetts Federal District Court dealt with the interplay of a special needs trust and eligibility for certain governmental benefits that the special needs trust was supposed to address. The case of DeCambre v. Brookline Housing Authority dealt with the beneficiary of a valid special needs trust who applied for a section eight housing voucher but was denied because of income that she received from a third party special needs trust, established by a Court. Ms. DeCambre was involved in a catastrophic accident which resulted in a series of settlements, with the proceeds directly deposited into the special needs trust. She received a total of $330,000.
The trust did not earn any income of it’s own, the truste only distributed the income in line with the terms of the trust and charged the normal and typical trustee fees. Ms. DeCambre did not have any control over the distribution of the income or money in the trust. The Court noted that the special needs trust was indeed valid and in conformity with the special needs trust enabling statute, found at 42 U.S.C. § 1396p(d)(4)(A) and (C). Indeed, the Court noted that Ms. DeCambre benefited from this trust insofar as she received Supplemental Security Income of approximately $850 per month and validly received Medicaid. These programs, the Court noted, specifically excluded the income from the a valid special needs trust. Ms. DeCambre applied for a section eight housing voucher through the Department of Housing and Urban Development (HUD) in 2005. The voucher was approved and provided from 2005 through to 2012, when HUD reduced it by approximately $1,000 per month, based on her income from the special needs trust. Ms. DeCambre sued HUD in Federal Court on several statutory grounds, based on HUD’s decision to reduce the amount of her housing voucher.