Can You Lose Disability Benefits if You Inherit Money?

If you are receiving Social Security Disability benefits and receive an inheritance or other windfall, it could affect your benefits. However, it depends on the type of benefits you are receiving. The Social Security Administration (SSA) administers two disability programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). How an inheritance impacts your benefits will depend on whether you are receiving SSDI benefits or SSI.

In most cases, if you are receiving SSDI, your benefits will not be affected by an inheritance. However, because SSI is a needs-based benefits program, any economic windfall, including an inheritance, could decrease or eliminate your monthly payments. If you anticipate an inheritance and are receiving disability benefits, contact our West Chester Social Security Disability attorneys immediately.

Many people depend on Social Security Disability benefits. Navigating the application process and ensuring you continue to receive the benefits you deserve is challenging. With decades of experience, the attorneys and staff at Young, Marr, Mallis & Associates are available to assist you with any Social Security benefits question or problem. Call (215) 515-2954 in Pennsylvania and (609) 557-3081 in New Jersey to schedule a free appointment.

Social Security Disability Insurance and an Inheritance

The SSA provides two disability programs. Social Security Disability Insurance is for disabled individuals who have worked long enough to be eligible. SSDI is funded through Social Security payroll taxes. Therefore, to qualify for SSDI, a person must not only suffer from an eligible medical impairment, they must also have earned enough work credits. Typically, a disabled worker must have earned 40 work credits to qualify for SSDI. As you can only earn four credits a year, most people must have worked at least ten years before they could receive SSDI benefits.

Because SSDI is based on your medical impairment, work history, and the number of work credits, your resources and assets are not taken into consideration. The only income restriction is that you are not permitted to earn more than $1,310 a month. The SSA does not consider inheritances earned income.

Supplemental Security Income and Inheritance

The other program the SSA offers is Supplemental Security Income. SSI is available for blind people, disabled children, and disabled adults with limited work histories. However, unlike SSDI, SSI is a needs-based program. To be eligible for SSI, the SSA will look at your income, assets, and other financial resources.

To qualify for SSI, your monthly income cannot exceed $794 for an individual or $1,191 for a couple. Additionally, the value of your assets and resources cannot be more than $2,000 for an induvial or $3,000 for a couple. Assets and resources include a broad category of items and income, though you could exclude essential assets such as your car or home. Our Pennsylvania Social Security Disability benefits lawyers will review your assets to determine what the SSA will count.

Any income will impact your SSI benefits. This includes earned income, such as a salary, and unearned income, such as an inheritance. If you receive an inheritance and are currently receiving SSI benefits, you must report your inheritance to the Social Security Administration.

Calculating Income for Purposes of Supplemental Security Income

You now know that an inheritance will affect your SSI benefits. The next question is probably, “how?” The SSA does not count all income towards your SSI limit. However, your inheritance will be calculated towards your limit unless it is protected under a special account.

There are certain kinds of income that will be excluded from the SSI limit.

  • The first $20 of income you receive in a month
  • Food stamps, welfare, or other public benefits that are needs-based
  • Tax refunds
  • Money spent on disability-related work expenses

It is important to have one of our experienced Philadelphia Social Security Disability benefits attorneys examining your records, assets, and resources to help determine how much of your income and resources the SSA will count towards the SSI limit.

Protecting Your Inheritance if You Receive Supplemental Security Income

There are a few ways you could protect your SSI benefits if you are going to inherit property or money. First, you should speak with our Pennsylvania disability lawyers to provide legal advice and guidance.

One option available is to have your inheritance placed in a special needs trust. A trust will have to be created by your benefactor before they die. An attorney could draft the necessary paperwork to create a trust. When your benefactor dies, the trust will go into effect. Under the provisions of a special needs trust, you would have access to funds for specific expenses, such as food, shelter, medical care, and education, without impacting your SSI benefits.

You might also be eligible for an Achieving a Better Life Experience, or ABLE account. An ABLE account is part of a program designed for qualifying individuals with disabilities. More specifically, an ABLE account is a tax-advantageous savings account that allows family members to gift up to $15,000 a year (in 2021) for children and other beneficiaries who suffered their disability before the age of 26.

Contact Our Pennsylvania Social Security Disability Lawyers if You Expect an Inheritance and are Receiving Disability Benefits

An inheritance is often the way a loved one provides for those they care for. However, if the beneficiary is receiving Social Security Disability, the inheritance might not provide the anticipated financial benefit. In some cases, a sudden windfall could result in the loss of much-needed monthly benefit payments. By speaking with one of our Bensalem Social Security Disability benefits lawyers before you receive your inheritance, steps could be taken to fulfill your benefactor’s intentions. Call Young, Marr, Mallis & Associates at (215) 515-2954 in Pennsylvania and (609) 557-3081 in New Jersey to schedule a free appointment.

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