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Home  ›  Will I Lose My Social Security Disability If I Inherit Money

Will I Lose My Social Security Disability If I Inherit Money

Written By Wednesday, April 27, 2022 Add Comment Edit

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Volition My Inheritance Bear upon My SSI Benefits?

Senior couple gets financial advice
Senior couple gets financial advice

If yous receive an inheritance while you are getting federal Supplemental Security Income (SSI) benefits, it could brand you ineligible to receive any more benefits. Federal law requires y'all to report to the Social Security Administration if you lot are beneficiary of an inheritance – fifty-fifty if you refuse to accept the inheritance. Failing to written report an inheritance can result in financial penalties and cause your SSI payments to terminate for up to iii years. However, there's a legal style to command and benefit from an inheritance and still go along getting SSI payments. Here's how that is done.

SSI and Social Security Benefits

SSI is different from Social Security and Social Security Disability Income (SSDI.) Social Security and SSDI are contribution-based programs. They are not means-tested. If you pay into these programs, y'all are eligible to receive benefits. Income from working at a job or other source could affect Social Security and SSDI benefits. However, receiving an inheritance won't affect Social Security and SSDI benefits.

SSI is a federal plan that pays benefits to adults over age 65 and children who take limited income and resource and are bullheaded or disabled. It is run by the Social Security Administration only is supported by general federal tax revenues instead of Social Security taxes. Eligibility for SSI not is contribution-based like other Social Security programs. That is, you don't have to pay Social Security or other taxes in gild to receive SSI benefits.

Rather than being contribution-based, SSI is means-based. It is specifically intended to assistance people with limited resources and income. That means a alter in your income or assets could reduce or eliminate your SSI benefits. An inheritance could also touch on eligibility for other federal benefits, such as the Medicaid healthcare insurance programme.

SSI Nugget Limits

Social Security form
Social Security course

The SSI means exam is strict. To exist eligible for SSI, an individual must accept no more than than $2,000 in assets. A couple can have no more $3,000. To make this conclusion, the Social Security Administration considers both income and available resources, which it calls countable resources. The effigy includes cash, bank accounts, vehicles and real manor but excludes your home, ane vehicle, household appurtenances and personal effects.

Considering these countable resource limits are so low, even a modest inheritance could put an SSI recipient over the threshold and cause benefits to exist reduced or ended. No matter how modest an inheritance is, SSI recipients are required to study information technology to Social Security within x days after the finish of the calendar month in which it was received.

The inheritance has to exist reported fifty-fifty if the person named as beneficiary refuses to accept it. That's because Social Security will regard a rejected inheritance as a transfer of avails and care for the same as if it was accepted by the casher.

Failing to written report an inheritance, transferred or not, carries a potential penalty of a $25 to $100 cut in benefits for each failure to written report or late study. Knowingly declining to study an inheritence or other of import change can result in a pause of payments for six months. If it happens repeatedly, payments could exist suspended upwards to three years.

Special Needs Trusts

Fortunately, there is a simple fashion to accept an inheritance without risking loss of SSI benefits. By setting up a special needs trust and depositing the inheritance into information technology, the casher tin can continue to receive SSI while also getting the benefit of the inheritance. The funds in the trust are overseen by a trustee such as parent or family member. The trustee can use funds in the trust to direct pay providers for medical expenses, dental expenses, personal care, education and even vacations.

Bank trust departments can set these trusts up for disabled recipients and their families. Special needs trusts can concord funds other than inheritances. That includes donations from family members, awards from lawsuits and proceeds of life insurance policies.

Bottom Line

Teen with Down Syndrome painting
Teen with Down's syndrome painting

If you desire to leave an inheritance or a big gift to someone getting SSI benefits, hash out it with that person. A generous impulse could paradoxically result in the beneficiary existence denied valuable benefits. That's because getting an inheritance tin can crusade the Social Security Administration to reduce or stop SSI benefits. Also, not reporting an inheritance can atomic number 82 to penalties and a do good interruption of up to iii years. However, past depositing the inheritance into a special needs trust the casher tin keep getting SSI payments and the inherited funds can be used to pay for medical and other special needs.

Tips on Handling an Inheritance

  • If you are getting SSI benefits and anticipate receiving an inheritance, consider talking it over with an experienced financial advisor. Finding one doesn't have to be difficult. SmartAsset'south free tool matches you with fiscal advisors in your area in five minutes. If you're set up to be matched with local advisors who volition help you achieve your fiscal goals, get started now.

  • A Social Security do good reckoner is a quick and easy fashion to get a solid guess of what you're going to be entitled to when you retire.

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The mail Will My Inheritance Affect My SSI Benefits? appeared first on SmartAsset Blog.

Source: https://finance.yahoo.com/news/inheritance-affect-ssi-benefits-174205213.html

Posted by: campbellhavot1998.blogspot.com

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