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Section 8 Housing Participant Permitted to Receive Special Needs Trust Benefits

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JUNE 27, 2016 VOLUME 23 NUMBER 24
When an individual is receiving Supplemental Security Income (SSI) benefits, or Medicaid (AHCCCS, in Arizona) benefits, he or she may have benefits reduced or eliminated if he or she receives a lump-sum settlement of a personal injury lawsuit or periodic payments from such a lawsuit. That is the usual circumstance giving rise to establishment of what is called a “self-settled” special needs trust. There are a number of specific requirements for establishment and administration of such a trust — but that is not our subject today. What about public benefits programs that are less-known — like Section 8 subsidized housing, for example?

That was the problem facing Kimberly DeCambre, a Massachusetts resident who had received a personal injury settlement. She established a special needs trust, protecting her SSI and Medicaid benefits, but she was also receiving Section 8 rent assistance. Could she maintain those benefits, as well?

One of many oddities in the patchwork of federal/state benefits programs is that the various programs may use “asset” and “income” differently in determining eligibility. For Section 8 housing subsidies, for instance, almost any payments made by any person on behalf of someone else will be counted as income to the beneficiary — unless the payments are “temporary, non-recurring or sporadic.” That is very different from the SSI standard, which permits unlimited payments directly for any goods or services so long as they are not “food or shelter.”

What that meant for Ms. DeCambre was devastating. While she had long paid $435 in rent (the total rent bill was $1,560), the Section 8 administrators determined that all the special needs trust payments on her behalf for previous years should be counted as income, ending her eligibility for the program altogether. Not only would her rent jump by over $1,000, but if her trust was able to pay anything toward her rent, it would reduce her SSI payments by more than $250 per month.

Ms. DeCambre sued, asking the trial court to determine that the trust’s payments of such things as cell and landline telephone payments, automobile expenses and veterinary bills for her cats should not be counted as income for Section 8 purposes. She argued that she needed those services because of her disabilities, that the Section 8 rules were penalizing her for transactions that were permissible under other federal laws, and that the payments were not really being made by someone else at all, since they were being made from her own money, now placed in the special needs trust.

The Federal District Court judge agreed with her, but only to a limited extent. Under the judge’s interpretation, the agency should have conducted a more thorough review of each transaction to determine whether it could be allowed as necessary for her emotional and medical needs. Ms. DeCambre appealed, seeking a more sweeping declaration of the correctness of her position; the Section 8 agency also appealed, arguing that none of the expenses paid by the trust should be excluded from the income determination.

The First Circuit Court of Appeals (with direct jurisdiction over Maine, New Hampsire, Rhode Island, Puerto Rico and Massachusetts) gave Ms. DeCambre her sweeping declaration. According to the three-member panel of appellate judges, the money going into Ms. DeCambre’s special needs trust was her own money. In other words, if the personal injury settlement proceeds had been paid directly to Ms. DeCambre, payments from that lump-sum would not be treated as income to her — and that result should not change just because her proceeds had gone into a special needs trust. With no payments from the trust being treated as income, Ms. DeCambre’s monthly rent cost should drop back to $435 — or even lower, since that figure included some payments that had been made before the final calculation treating all trust payments as income. DeCambre v. Brookline Housing Authority, June 14, 2016.

What does this decision mean for other special needs trust beneficiaries on Section 8 housing subsidy programs? It is potentially a profound shift in the way such participants will be treated. But it is important to recognize that Ms. DeCambre’s situation was different from those of many other trust beneficiaries.

First, it is likely that the logic of the holding will apply only to self-settled trust beneficiaries. If a trust is established, say, by parents of an individual with a disability, and funded with the parents’ own funds, that trust (usually called a “third-party” trust) will not be treated the same as Ms. DeCambre’s trust.

It is also unclear whether some individuals on Section 8 housing might now have the opportunity to establish a special needs trust to maintain just those benefits. Given housing authorities’ interpretation of the regulations before this decision, it has been unproductive to consider such an approach. Now that might be a possibility in individual cases.

It is also odd timing to have this development arrive just as Achieving a Better Life Experience Act (ABLE Act) accounts become available. Those accounts offer new flexibility to pay housing expenses for individuals with disabilities, and as a result there are a handful of new options available to cover such expenses.

A confusing network of public benefits programs just became more confusing — but at the same time, more approachable. It is unclear whether the housing authority involved in Ms. DeCambre’s case might seek Supreme Court review of her decision, or whether other, similar cases might begin to move through other Federal Circuits, but there is likely to be a patchwork of approaches for the next few months or years. The good news, though: housing problems for individuals with disabilities will not be so impenetrable as they have been over the past three or four decades.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

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Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.