Inheriting money can be life-changing. However, what if your eligibility for the necessary social security benefits is adversely affected by that inheritance?
An elder law lawyer in Florida can guide you through your options and help you decide whether your inheritance will endanger your benefits.
Continue reading to learn what occurs if you inherit money while receiving Social Security disability benefits.
Inheriting money while receiving benefits can be a complex situation, particularly if you’re on Supplemental Security Income (SSI). This guide will delve into the intricacies of how inheritances affect SSI benefits, providing you with the knowledge to navigate this situation effectively.
SSI Eligibility and Asset Limits
SSI is a federal program designed to provide financial assistance to individuals with limited income and resources who are aged 65 or older, blind, or disabled. The program has strict eligibility requirements, including asset limits. Individuals are only allowed to have a maximum of $2,000 in countable resources ($3,000 for couples). Countable resources include cash, bank accounts, stocks, bonds, and other assets that can be easily converted to cash.
How Inheritances Affect SSI Benefits
Inheritances are considered countable resources, meaning they can affect your SSI eligibility. If the inheritance amount exceeds the asset limit, you may lose your SSI benefits. However, there are ways to manage inheritances and still maintain your eligibility.
Reporting Inheritances to the Social Security Administration
It’s crucial to report any inheritances to the Social Security Administration (SSA) within 10 days of the month following the month you received the inheritance. Failure to report can result in penalties, including a reduction in benefits or even a temporary suspension.
Special Needs Trusts: A Solution for Maintaining SSI Eligibility
A special needs trust is a legal arrangement that allows you to set aside funds for a disabled individual without affecting their SSI eligibility. The trust is managed by a trustee, who uses the funds to cover the beneficiary’s essential needs, such as medical expenses, education, and housing.
Key Considerations for Inheritances and SSI Benefits
Here are some key points to remember when dealing with inheritances and SSI benefits:
- Inheritances are considered countable resources and can affect SSI eligibility.
- It’s essential to report inheritances to the SSA within 10 days.
- Special needs trusts can be used to manage inheritances without jeopardizing SSI benefits.
- Consult with a financial advisor or legal professional for guidance on managing inheritances and SSI benefits.
Inheriting money while on SSI benefits requires careful planning and consideration. By understanding the rules and regulations, you can take steps to protect your eligibility and ensure that the inheritance benefits the individual receiving SSI. Remember to report inheritances promptly, explore special needs trusts, and seek professional guidance to navigate this complex situation effectively.
Comparing SSDI to SSI
I now want to compare and contrast SSDI with SSI.
Whether you are over 65 or under 65, you are eligible for SSI benefits if you are disabled and your income falls below a specific threshold.
In the year 2023, that monthly income limit is $914. 00 (this income threshold changes every year).
If your income is below $914. 00, you are eligible to apply for SSI if you are over 65 or disabled.
Basically, they will bring your income up to $914. 00. So as an example, if your income is $913. 00 and you submit an application, you will be eligible for $1 in monthly SSI benefits.
Some may ask, “Why would we do that? Who cares about $1?” But for many, that matters because receiving Medicaid is automatic for SSI recipients, regardless of the amount of money they receive.
Not Medicare; but Medicaid.
There is no waiting period. You are virtually enrolled in your state’s community Medicaid program as soon as you are able to receive SSI benefits for at least one dollar per month.
So again, SSDI gets you Medicare; SSI gets you Medicaid.
Just to add a little more confusion, it is possible to qualify for both SSI and SSDI. It is also possible to receive both Medicare and Medicaid.
Do You Have SSI Disability or SSDI Disability?
The interesting thing about this question is that there are a lot of disability programs, and each one has very different rules about what happens if you inherit money. Additionally, both of these terms are frequently used to refer to disabilities, and many claim to be on social security disability without being aware of which program they are on.
Reiterating: SSI and SSDI are both occasionally referred to as “disabilities.”
I will therefore explain to you how to distinguish between SSIÂ and SSDI, as well as the ramifications for receiving a personal injury settlement, selling your home, or inheriting money. You can also choose to watch this video:Â.
There is SSDI and SSI.
With the SSDI program, you can start saving for retirement early. SSDI is for those who have paid into the system, worked a specific number of quarters, and become disabled before turning 65 (there are a few exceptions, but this is the general rule).
You are then entitled to the SSDI program.
Medicare is available to you if you wait two years (with a few exceptions) after receiving SSDI approval.
What Happens If You Inherit Money While On Social Security Disability? // Elder Needs Law
FAQ
Does an inheritance affect my benefits?
Will I lose my disability benefits if I inherit money?
Will an inheritance affect my Social Security benefits?
How to avoid being cut off SSI benefits when you get a sum of money?
What happens if I receive an inheritance while getting Social Security disability?
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.
Can you leave an inheritance while keeping SSI benefits?
If you want them to receive an inheritance while keeping their SSI benefits, you can make it happen—but you just need some careful planning to make sure the inherited money is handled the right way. Let’s take a closer look at how you can leave an inheritance that will help provide a secure financial future without sacrificing SSI benefits.
What happens if I don’t spend my inheritance?
In the month you receive an inheritance, that money is considered income. If you do not spend it all during the month you receive it, the remaining funds will be considered a resource the following month, which may potentially push you over the income threshold and disqualify you from future benefits.
What happens if I don’t report my inheritance to Social Security?
The SSA will recalculate the SSI monthly benefit based on this new information. If they don’t report the inheritance to Social Security, they could face a monthly SSI benefit reduction of up to $100 or even lose the benefit entirely for up to three years.