Brandon special needs attorneys are often asked what the impact is to benefits like SSI or Medicaid if a person with disabilities receives an inheritance from a loved one. The answer really depends on how the inheritance is handled. The short answer is that any inheritance that’s left outright to a person with special needs can cause ineligibility for benefits. On the flip side, an inheritance properly left behind in a Special Needs Trust will likely have no impact on benefits. Let’s take a look at the most common benefit programs that people with disabilities receive and exactly how receiving an inheritance can impact eligibility for each.
Social Security Disability Insurance (SSDI)
SSDI is a federal benefit for those with disabilities. A person can receive SSDI under two conditions: if their disability renders them unable to work and if they have paid into Social Security for a certain period of time. As with anything, there are exceptions to this rule—namely, if the individual is under age 22 and if one or both parents have paid into Social Security and are also disabled, receiving Social Security payments, or are deceased. Individuals who can earn an income through employment are usually disqualified from receiving SSDI. Income received from elsewhere, such as an inheritance, does not automatically disqualify them from receiving SSDI payments. A Special Needs Trust is not needed to protect the inheritance or the benefits since SSDI is not financially needs-based.
Supplemental Security Income (SSI)
SSI is often confused with SSDI since they both give benefits to individuals with special needs. In reality, though, these are two very different programs. Strict income requirements are placed on SSI beneficiaries, and they will be disqualified from receiving benefits if they earn any income above a certain amount. SSI is a needs-based program, so a Special Needs Trust will likely be required in order to receive an inheritance without jeopardizing benefits. In such a case, the trust would “own” the assets and they would not be in the individual’s name to cause any conflicts.
Medicaid is a federal health insurance program that provides medical coverage for those with little or no income. Medicaid is also a needs-based program with very strict income and asset limits. A Special Needs Trust will also likely be necessary to hold an inheritance for a Medicaid recipient so that they do not get kicked off of their healthcare benefits.
The bottom line is that when it comes to leaving an inheritance to a person with special needs or disabilities, careful planning must be considered to ensure there is no loss of important benefits or resources that the individual counts on for his or her basic needs. If you need help getting started and evaluating your options, we invite you to contact our Brandon special needs attorneys at (813) 438-8503 to schedule an appointment.