Protecting a Childís SSI Benefits When They Receive an Inheritance

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Disabled children may qualify for SSI benefits. These benefits can be particularly helpful in families that do not have much income. Sometimes a child who receives these benefits may have a loved one who cares about him or her and wants to leave much-needed funds behind to an individual in this situation. However, if it is not structured properly, an inheritance can cause a person on SSI to lose their benefits.

Qualifying for SSI

Supplemental Security Income is a means tested public benefit that provides monetary benefits to its recipients. This type of benefit may be available to adults who have an insufficient work history to qualify for Social Security Disability Insurance benefits, as well as to children who have never worked. The maximum amount of benefits that a person can receive for SSI is $735 a month in 2018. Additionally, there is a resource limit for this program, which is $2,000 for an individual or $3,000 for a couple.

When a person qualifies for SSI, he or she is also determined eligible for Medicaid. This benefit is often even more important than the SSI monetary benefit because it provides for much-needed medical care.

Problems Receiving an Inheritance

If an SSI beneficiary receives a lump-sum through a gift, inheritance or otherwise, this may serve to make him or her ineligible because of having too many resources. Additionally, a disabled individual may even lose these benefits if he or she simply refuses the gift or inheritance. It is important to work with a lawyer if any type of gift or inheritance is expected to learn about the possible options and how best to protect the individualís benefits. Some options may include:

Going Off Means Tested Benefits

One option is to simply allow the claimant to go off of means tested benefits. If the gift or inheritance is worth a large amount, it may be to his or her advantage to simply forego the benefits to which he or she was otherwise entitled. When off of these benefits, there likely are not any restrictions on how the funds can be used. Therefore, the beneficiary may be able to use these funds to pay for housing, food, clothing, medical care and other basic needs.

Spend Down

Another option is for the beneficiary to spend down the gift or inheritance in the month that it is received. If the beneficiary is not over the resource limit because he or she spent down the gift or inheritance, he or she can retain means tested benefits, including medical coverage. Benefit programs may allow for a certain amount or types of exempt resources, such as a home, one vehicle or a burial policy up to a certain amount. Properly spending down the sum does not simply mean wasting the money. Instead, the funds should be used to improve the individualís quality of life. For example, improvements made to the home or an accessible van may improve his or her quality of life. Debt may be paid off, or medical expenses prepaid. Assistive devices such as canes, electronic wheelchairs or medical devices may also help. Any portion of the inheritance that is not spent down in the same month when it is received will be treated as a countable resource in the next month.

Fund an ABLE Account

An ABLE account may be set up and funded with up to $14,000 in a year. This type of account can pay for Qualified Disability Expenses, which include housing, education, health, prevention and wellness, transportation, employment training and support, financial management and administrative services, assistive technology and personal support services, legal fees, expenses for oversight and monitoring and funeral and burial expenses.

Establish a Special Needs Trust

Another potential option to help a claimant retain his or her public benefits while still giving him or her a gift or inheritance is to establish a special needs trust. This type of trust is specifically designed for this situation. However, special needs trusts often have very strict provisions. They may state that the funds can only be used for certain purposes, such as additional medical treatment or therapies that is not covered by the benefits. These types of trusts must usually include a provision that states that any funds remaining in the trust at the beneficiaryís passing must be provided to the state for the payments that it has provided the beneficiary.

Contact a Lawyer for Assistance

An experienced estate planning lawyer who is familiar with planning for SSI or Medicaid can help explain the possible options.


Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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