Will the Funding of a Special Needs Trust Affect My SSDI or Section 8?
My mother has decided to gift me some money now instead of waiting for her passing when there may not be anything to inherit. My brother sought professional counseling and was assured I would not lose any government benefits (SSDI and Section 8). He established a special needs trust with $200,000. Will I lose my Section 8 eligibility?
The advice your brother received is correct, but it’s complicated. The establishment of a third-part special needs trust funded by your mother will not affect your eligibility for benefits, but the use of the funds in the trust could. Your Social Security Disability Income (SSDI) is fine; it’s not affected by your assets or income.
Section 8 is especially complicated. To the extent the trust distributes funds to you, those distributions are considered income and your rent should go up by about 30 cents for every dollar distributed. This can also be the case for distributions of trust funds on your behalf. Under the Section 8 rules, regular distributions—for instance, payments for internet services, a cell phone, gym membership—are considered in-kind income with the same 30 cent increase in rent for each dollar paid out. On the other hand, irregular payments—for instance, for a new car or stereo system—are not considered in-kind income and would not affect your rent. What’s regular and what’s irregular is a big grey area and can be open to interpretation by the housing agency, with different agencies giving different answers. Our approach is to call the client’s housing agency directly to get guidance on what it would or would not consider to be regular income.
Does My Daughter Need a Special Needs Trust If She’s Receiving SSDI?
Special Needs Trusts and Subsidized Housing
Administering Special Needs Trusts and Preserving Public Benefits
Don’t know how your trust works?
Whether you’re creating a plan, managing a trust, or are a beneficiary of a trust, this book is your easy-to-read roadmap.