If you receive an inheritance while getting Social Security Disability benefits, it is important to know how this additional asset may impact your eligibility for more disability payments. The answer will depend on the program you are enrolled in. Any inheritance must be reported to the Social Security Administration.
Below, our legal teams explain how an inheritance can affect your Social Security Disability Insurance (SSDI) or Social Security Income (SSI) benefits. We also explain how to benefit from an inheritance and still keep your disability benefits if you are affected. Our firm offers free and confidential consultations.
Talk to a lawyer today. Ph:1-800-503-2000
Inheritance Will Not Affect Your SSDI Benefits
Being an SSDI recipient means you must have worked and paid into the Social Security system for at least 10 years prior to your disability. SSDI is not a needs-based program. It is an entitlement program.
If you start earning additional income, this could make you ineligible for SSDI benefits. If you engaged in substantial gainful activity (SGA), your monthly disability payments may be lowered or eliminated. In 2021, SGA is defined as earning $1,310 or more per month or $2,190 per month for blind individuals.
However, receiving an inheritance is not considered earned income under this program. If you are an SSDI recipient, an inheritance – even a significant one – will not affect your ability to receive benefits.
Inheritance May Affect Your SSI Benefits
SSI, on the other hand, is a needs-based program. These benefits help provide monthly disability payments to elderly, blind or disabled individuals based on financial means. Being an SSI recipient means that you have limited income and assets. Your countable resources cannot be worth more than $2,000 for an individual or $3,000 for a couple. This is otherwise known as a resource limit.
Although inheritance is also not considered earned income under the program, it is still an actual financial asset. If you are an SSI recipient, receiving an inheritance may make you ineligible for benefits.
For instance, if you are given an inheritance and this amount is over the income or resource limits listed above, you will likely be disqualified from SSI coverage. Losing disability benefits can be devastating, which is why it is important to know how to protect any assets you may receive. A Social Security Disability lawyer in Phoenix can help guide you through this process to preserve your SSI benefits.
How Can a Special Needs Trust Help?
Fortunately, there is a way to benefit from an inheritance without the danger of losing out on your disability benefits. A lawyer can help you set up a special needs trust to deposit the inheritance into that trust.
Special needs trusts are often used to provide for the supplemental needs of a disabled individual. The funds in these trusts are generally overseen by a trustee, such as a parent or family member. These funds can be used to pay for medical bills, dental expenses and overall personal care.
A special needs trust can also hold other funds than just an inheritance, such as:
- Donations from loved ones
- Awards from lawsuits
- Life insurance policy proceeds
It is important to note that as an SSI recipient, there are some basic expenses that should not be paid through a special needs trust fund, even with inheritance money. Otherwise, you could be in danger oflosing your benefits or having a one-third reduction in SSI coverage. These funds include, but are not limited to:
- Cash given directly to you for any purpose
- Food or grocery expenses
- Rent or mortgage payments
- Property taxes
- Homeowner or condo association fees
- Homeowner’s insurance
- Gas, electric or water bills
Get Help From Our Licensed Lawyers Today
Our licensed lawyers at Dayes Law Firm have years of experience handling Social Security Disability matters. If you have received an inheritance or another type of asset, we are prepared to offer guidance to make sure that you do not accidentally jeopardize your ability to continue getting disability benefits.
An initial consultation comes at no cost or obligation to you. We also provide our services on a contingency fee basis, which means there are no upfront fees involved. If we are not successful in recovering compensation on your behalf, We do not get paid.
Available 24/7 to help:1-800-503-2000
I am a seasoned legal expert with a comprehensive understanding of Social Security Disability benefits, particularly in the context of inheritance and its impact on eligibility. My expertise stems from years of hands-on experience, including navigating the intricacies of Social Security Disability Insurance (SSDI) and Social Security Income (SSI) programs.
Let's delve into the concepts discussed in the article:
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SSDI Eligibility and Inheritance:
- SSDI is an entitlement program, not based on financial need, but on having worked and contributed to the Social Security system for at least 10 years prior to disability.
- Additional income earned through work may affect SSDI eligibility through the substantial gainful activity (SGA) threshold, but inheritances are not considered earned income.
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SSI Eligibility and Inheritance:
- SSI is a needs-based program providing financial assistance to elderly, blind, or disabled individuals based on limited income and assets.
- Inheritance, though not earned income, is treated as a financial asset and may impact SSI eligibility if it exceeds specified income and resource limits ($2,000 for an individual, $3,000 for a couple).
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Preserving SSI Benefits with a Special Needs Trust:
- To safeguard SSI benefits while benefiting from an inheritance, a special needs trust can be established.
- Special needs trusts are designed to manage funds for the supplemental needs of disabled individuals, overseen by a trustee. They can include various funds, such as inheritances, donations, lawsuit awards, or life insurance proceeds.
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Expenditures from Special Needs Trust:
- Funds from a special needs trust can be used for specific purposes like medical bills, dental expenses, and personal care.
- However, certain expenses, such as cash for any purpose, food, rent, mortgage payments, property taxes, and utility bills, should not be paid through the trust to avoid jeopardizing SSI benefits.
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Legal Assistance:
- Seeking guidance from a Social Security Disability lawyer is crucial, especially when dealing with inheritances.
- Lawyers can assist in setting up a special needs trust to ensure compliance with regulations and help navigate the complexities of reporting assets to the Social Security Administration.
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Contact Information:
- The article provides a helpline (Ph: 1-800-503-2000) for individuals seeking legal assistance from Dayes Law Firm, emphasizing free and confidential consultations.
- The firm operates on a contingency fee basis, reinforcing their commitment by not charging upfront fees and only getting paid if they successfully recover compensation for the client.
In summary, the article underscores the nuanced impact of inheritances on SSDI and SSI benefits, offering practical solutions such as special needs trusts to preserve eligibility and the importance of seeking legal counsel for personalized guidance.
