2024:  

The MLO Minute: “Special Needs Trusts And Supported Housing – A New Benefit”

By Dennis McAndrews, Esq., and Caitlin McAndrews, Esq. — 

The process of securing affordable, appropriate housing for persons with disabilities (and often their family members) can be a challenging process. Over the years, when we have prepared special needs trusts for persons with disabilities, an important consideration has often been considering and addressing the needs of these individuals to secure or maintain public benefits related to housing.

The Housing Opportunity Through Modernization Act of 2016 was enacted to make the Section 8 housing program easier for the public to apply for and less expensive for states to administer. Developing regulations under this Act proved challenging for the Department of Housing and Urban Development, but those regulations were finally promulgated and became effective on January 1, 2024. The final regulations clarified that distributions of principal from special needs trusts would not be counted for Section 8 eligibility. Moreover, the final regulations provide that assets held in a special needs trust outside the control of the family and those residing in the property are an exempt asset for Section 8 eligibility, which, under the Act, includes an asset test of $100,000.

These new regulations can be very helpful for persons with disabilities who are beneficiaries of a special needs trust. Of course, it is still important for trustees and beneficiaries to track income regarding eligibility and consider use of a companion ABLE account for its permissible income distributions related to housing costs. Trustees should also confirm that the trustee of the trust does not fall under the definition of “family member” and does not reside in the same household, as this will render the trust an available asset. If an existing trust needs to be amended to address a housing issue, or the creation of a special needs trust can assist with Section 8 eligibility, we can assist in this important process. Our experienced estate planning attorneys are ready to serve you and your family.