When you are receiving benefits such as Social Security Disability Insurance from the government as your primary source of income, it can be a little scary when that income is out of your control. You may already know that your income from other sources is limited when you are on SSDI, but what about an inheritance? Can an inheritance make you lose your SSDI benefits? Tabak Law is an expert in these SSDI matters, and we can help.
Will an Inheritance Disqualify You From SSDI Benefits?
It’s easy to get confused but let us try to make it simple. SSDI is not a needs-based program. As such, it only looks at your ability to work. This means money received from an inheritance does not factor into your SSDI benefit.
Can Income Disqualify You From SSDI?
Remember when we said that SSDI only looks at your ability to work? One of the ways that it measures this ability is through something called a substantial gainful activity or SGA. This means work that you are paid for.
This doesn’t mean you can’t work at all. Instead, you have a limit. Through work, you are allowed an income of up to $1,350 a month in 2022. If you are blind, that limit is a bit higher at $2,260 per month. These limits do go up with the annual cost of living adjustments so they will likely be higher in 2023.
Will an Inheritance Disqualify You From SSI Benefits?
Unlike SSDI, SSI or Supplemental Security Income is a needs-based program. As such, when you receive an inheritance, you have to be very careful what you do with it. This is because people who are on SSI have asset limits. This limit is $2,000 for an individual and $3,000 for a couple.
This asset limit only includes “countable” assets. Many assets are excluded such as your home, a car, and various household, medical, and consumable items. What does count though is cash, bank account assets, and “luxury” goods.
How Can Someone on SSI Inherit Money?
When setting up an inheritance with someone on SSI, both parties should first discuss the matter. It may feel good to leave an inheritance to someone who is receiving SSI, but if you don’t consult with them first you could leave them in a difficult position.
One alternative is to set up a special needs trust. This type of trust is handled by a trustee such as a parent, sibling, or guardian. Once set up and funded, the trustee can use the money for the care of the SSI recipient. Asset limits will still have to be observed. Running money through a special needs trust doesn’t mean the SSI recipient can suddenly buy a second home. It does mean that inherited funds can still go towards the well-being of an SSI recipient, and that’s the important part. You can even use it for a vacation!
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