How Does an Inheritance Affect My Social Security Disability Benefits?

By July 19, 2019Estate Planning

If you are receiving Social Security disability benefits, or if you are considering leaving an inheritance to a person who is currently receiving Social Security disability benefits, you need to know exactly how these additional ‘assets’ will impact eligibility. In some cases, the inheritance will not affect eligibility. However, in other circumstances, an inheritance could actually make a disabled person ineligible for their benefits.

The most important factor distinguishing these two scenarios is whether the applicant is receiving SSDI disability benefits or SSI disability benefits. Here, our Tacoma, WA estate planning attorneys explain the most important things you need to know about how Social Security disability benefits can be affected by received inheritance.

Inheritance Will Not Affect Your SSDI Benefits

To be eligible to obtain Social Security Disability Insurance (SSDI) benefits, you must have paid into the system. SSDI is not a needs-based program. Quite the contrary, the more you pay into the system, the higher your level of disability benefits – should you need to draw them.

Of course, if you start earning additional income, you could become ineligible to get SSDI disability benefits. However, inheritance is not earned income. As such, the inheritance will not affect your ability to receive benefits through SSDI. Indeed, even a significant inheritance check should not have any adverse impact on your ability to get your disability benefits through this insurance system.

Inheritance May Affect Your SSI Disability Benefits

Supplemental Security Income (SSI) is funded through general tax revenue. You do not have to pay into this system to become ‘insured’ or eligible to obtain SSI disability benefits. The requirements are instead based on income level and financial assets. In other words, SSI disability is a needs-based system.

Inheritance, while not earned income, is still a real financial asset. All financial assets are considered by SSI disability claims reviewers. As such, receiving inheritance could have an adverse impact on SSI benefits. In fact, inheritance could make someone ineligible to get their Supplemental Security Income (SSI) disability benefits.

Estate Planning Tip: How to Protect SSI Disability Eligibility

For people who receive SSI, proper estate planning is extremely important. There are options available that allow a person to provide a disabled loved one financial protection – without accidentally undermining their eligibility for SSI. Among other things, you may be able to establish a Special Needs Trust that helps to give a disabled person financial support while also ensuring their ability to receive SSI disability benefits and Medicaid benefits are preserved. When properly crafted, assets held in a Special Needs Trust will not be counted for the purposes of the SSI disability means test.

Get Help From Our Washington Estate Planning Lawyers Today

At the Alliance Law Group, our top-rated Tacoma estate planning attorneys have extensive experience handling Social Security disability matters. To set up a fully confidential initial consultation, please contact our legal team today. With a law office in University Place, we serve communities throughout the region, including Tacoma, Lakewood, Federal Way, Parkland and Puyallup.

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