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Can Receiving an Inheritance Affect My Disability Benefits?

July 29, 2021

disability recipient receiving an inheritance

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.

Below, our legal teams explain how an inheritance can affect your Social Security Disability Insurance (SSDI) or Social Security Income (SSI) benefits. We also explain how to benefit from an inheritance and still keep your disability benefits if you are affected. Our firm offers free and confidential consultations.

Talk to a lawyer today. Ph: 1-800-503-2000

Inheritance Will Not Affect Your SSDI Benefits

Being an SSDI recipient means you must have worked and paid into the Social Security system for at least 10 years prior to your disability. SSDI is not a needs-based program. It is an entitlement program.

If you start earning additional income, this could make you ineligible for SSDI benefits. If you engaged in substantial gainful activity (SGA), your monthly disability payments may be lowered or eliminated. In 2021, SGA is defined as earning $1,310 or more per month or $2,190 per month for blind individuals.

However, receiving an inheritance is not considered earned income under this program. If you are an SSDI recipient, an inheritance – even a significant one – will not affect your ability to receive benefits.

Inheritance May Affect Your SSI Benefits  

SSI, on the other hand, is a needs-based program. These benefits help provide monthly disability payments to elderly, blind or disabled individuals based on financial means. Being an SSI recipient means that you have limited income and assets. Your countable resources cannot be worth more than $2,000 for an individual or $3,000 for a couple. This is otherwise known as a resource limit.

Although inheritance is also not considered earned income under the program, it is still an actual financial asset. If you are an SSI recipient, receiving an inheritance may make you ineligible for benefits.

For instance, if you are given an inheritance and this amount is over the income or resource limits listed above, you will likely be disqualified from SSI coverage. Losing disability benefits can be devastating, which is why it is important to know how to protect any assets you may receive. A Social Security Disability lawyer in Phoenix can help guide you through this process to preserve your SSI benefits.    

How Can a Special Needs Trust Help?   

Fortunately, there is a way to benefit from an inheritance without the risk of losing out on your disability benefits. A lawyer can help you set up a special needs trust to deposit the inheritance into that trust.

Special needs trusts are often used to provide for the supplemental needs of a disabled individual. The funds in these trusts are generally overseen by a trustee, such as a parent or family member. These funds can be used to pay for medical bills, dental expenses and overall personal care.

A special needs trust can also hold other funds than just an inheritance, such as:

  • Donations from loved ones
  • Awards from lawsuits
  • Life insurance policy proceeds 

It is important to note that as an SSI recipient, there are some basic expenses that should not be paid through a special needs trust fund, even with inheritance money. Otherwise, you could risk losing your benefits or having a one-third reduction in SSI coverage. These funds include, but are not limited to:

  • Cash given directly to you for any purpose
  • Food or grocery expenses
  • Rent or mortgage payments
  • Property taxes
  • Homeowner or condo association fees
  • Homeowner’s insurance
  • Gas, electric or water bills

Get Help From Our Licensed Lawyers Today      

Our licensed lawyers at Dayes Law Firm have years of experience handling Social Security Disability matters. If you have received an inheritance or another type of asset, we are prepared to offer guidance to make sure that you do not accidentally jeopardize your ability to continue getting disability benefits.

An initial consultation comes at no cost or obligation to you. We also provide our services on a contingency fee basis, which means there are no upfront fees involved. If we are not successful in recovering compensation on your behalf, we do not get paid so there is no risk to you.

Available 24/7 to help: 1-800-503-2000

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