Petition of Kelly Hagenbuch

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Petitioner Kelly Hagenbuch challenged the termination of her food stamp benefits by the New Hampshire Department of Health and Human Services (department). The department terminated the benefits because it found that her income exceeded the maximum amount permitted by the program. In calculating petitioner’s income, the department included distributions from an irrevocable trust, of which petitioner was the sole beneficiary, that had been made by the trustee to third parties. These distributions included payments for trust expenses and for legal fees that the petitioner had incurred to obtain public benefits. This case presented an issue of first impression in New Hampshire: whether a distribution made by the trustee of an irrevocable trust to third parties counted as income to the trust beneficiary for the purpose of determining food stamp benefits. The narrow question before the New Hampshire Supreme Court was whether the trust distributions were “owed” to the petitioner. The Court did not decide the validity of the premise underlying the department’s argument—that because the money used to establish the Trust was derived from the settlement of the petitioner’s personal injury lawsuit, the Trust was established with the petitioner’s “own funds.” Even assuming that the premise was correct, the Court concluded that the vendor payment exclusion applied to the trust distributions because the regulations do not recognize the distinction that the department attempts to draw regarding trusts originally funded by the household. In this case, given that the distributions made by the trustee to third parties were not owed to the petitioner—and therefore, were excluded vendor payments—the department should have excluded the trust distributions from the petitioner’s income. Accordingly, the Court reversed the presiding officer’s decision that the department properly counted the trust distributions as income. View "Petition of Kelly Hagenbuch" on Justia Law