Special-needs trust reduces her federal subsidy
A disabled mother living on federal assistance could very well end up homeless after inheriting money from her father who died last year.
The sum, $60,000, is not enough to sustain the 55-year-old north Spokane woman, but it is enough to cause her to lose the federal housing subsidy that allows her to live in a duplex apartment with her two teenage children.
“I can’t lose my housing,” said Diana Harding. “I have no other place to go.”
Harding is suing the Spokane Housing Authority, doing business as Northeast Washington Housing Solutions, which administers her Section 8 housing vouchers, over the public corporation’s interpretation of federal rules about how she uses her inheritance.
The housing authority says it is only following U.S. Department of Housing and Urban Development rules designed to protect federal aid from being abused.
Harding qualifies for Supplemental Security Income because of post-traumatic stress disorder resulting from abuse she has suffered.
To maintain her SSI benefits, as well as her eligibility for Medicaid, the state and federal health insurance for the poor, Harding’s Spokane attorney Cheryl Mitchell established for her a special-needs trust, which was approved in November by Superior Court Judge Michael Price.
Such trusts, widely used to protect disabled persons on governmental programs, are to be used to enhance the life of the beneficiary, but not to replace goods and services provided by Social Security and Medicaid.
The trust cannot be used for food, clothing or shelter. Some of the money from Harding’s trust has been distributed for such things as repair of her 18-year-old son’s car, a computer for her 17-year-old daughter and counseling for herself.
After paying her legal fees, trustee fees and other distributions on Harding’s behalf, about $30,000 remains in her trust.
However, the housing authority does not recognize the protections and counts every dollar distributed from it as income. Persons receiving Section 8 vouchers must spend 30 percent of their income on housing. The federal subsidy covers the rest.
In March, the housing authority advised Harding that her share of her $800 rent would increase from $122 to $438 a month and that if the trust distributions continued, she would lose her rental assistance entirely.
Mitchell challenged the decision and received an “informal review” by the housing authority. The hearing officer, Yvette Buckley, who supervises the employee who made the decision to increase Harding’s rent, upheld the decision. Outside of the courts, there is no further appeal.
Steve Cervantes, director of Northeast Washington Housing Solutions, says the housing authority has a responsibility to uphold the Code of Federal Regulations, which states, “Any income distributed from the trust fund shall be counted when determining annual income.”
However, housing and disability rights attorneys dispute this interpretation.
Thomas Beltran, a disability rights attorney in Los Angeles who specializes in special-needs trusts, says there are exceptions on “temporary, nonrecurring or sporadic income” distributed at the discretion of a trustee.
“If you can’t budget for it, it’s not countable,” Beltran said. “If Spokane Housing Authority wanted to interpret the rules in a way that didn’t impact her at all, they could.”
Further, the overarching duty of the states, he said, is to uphold the Olmstead decision in which the U.S. Supreme Court affirmed the right of individuals with disabilities to live in their community and not be institutionalized.
But housing authorities across the nation interpret income distributed from trusts like Harding’s in different ways, Beltran said.
Cervantes said his agency’s interpretation was upheld by the HUD office in Seattle.
“A one-time withdrawal could be an exception, but steady withdrawals to supplement living expenses must be counted,” Cervantes said. “We can’t make arbitrary exceptions.”
In June, Price issued a temporary injunction barring the housing authority from raising Harding’s share of her rent until the court can decide her case.
Currently, there are 4,622 Spokane County households receiving Section 8 rental assistance, and there are 1,600 on a waiting list.
If Harding is terminated from the program, Mitchell said, it is possible she will never again receive housing assistance. She will not be able to afford fair market rent, and she will most likely become homeless.
“It’s punitive to say to a disabled person, ‘You’re disabled; you don’t deserve a better life,’ ” Mitchell said, adding that her client has used her inheritance to help her children. “Do we want the children of the disabled to also be stuck not being able to better their lives?”
A GRIP ON SPORTS • There were at least a couple things that happened Friday that had to put a smile on your face. Read on.
You'll have to contend with Iron-type people, if you go downtown this weekend. They'll be practicing and strutting their muscular bodies on Saturday. And performing on Sunday. I'm curious what ...
Eric O'Grey, the Spokane Valley man whose story about losing more than 100 pounds with the help of a shelter dog went viral earlier this year, has a book deal. ...
SEATTLE -- Environmental activists mixed Eastern and Western Washington concerns at a protest outside the site of President Obama's speech Friday. They called for the federal government to remove or ...