Recently on our disability forum a user asked, I have a brain tumor, and I am currently receiving SSI benefits. My father is creating his will and has decided to leave me $50,000. I am wondering how that money will affect my SSI monthly payment and whether it will increase my resources so high that I will lose both SSI and Medicaid?
What is SSI?
Supplemental Security Income or SSI is given to individuals who are blind, aged or disabled and are unable to work for at least 12 continuous months. Although SSI applicants do not have to have a work history or have accumulated work credit to qualify, they must have very limited income and resources.
Unfortunately, without proper planning, both income and resource limitations can make it very difficult for SSI recipients to keep their SSI benefits if they receive cash settlements or an inheritance.
How much income can I earn?
The maximum payment for SSI from the federal government is referred to as the Federal Benefit Rate (FBR). This amount periodically changes, but as of 2016, it is $733 for an unmarried couple and $1,100 for a married couple. If you are working and earning an income, assuming youre your income is not exempt, your earnings will reduce your SSI benefit payment. If you make too much money in any given month your SSI benefit can be reduced to zero.
What are the Resource Limits?
Earning income is one disqualifying factor; another is resources. In fact, if you are single the SSA will only allow you to have $2,000 in assets to qualify for SSI. Assets can include stocks, bonds, checking account balances, etc. There are some exceptions to the resources, such as the value of your home and one car up to $4,500, but if you have too many resources you will automatically be denied SSI benefits.
How can a Special Needs Trust help me keep my SSI?
A trust is a legal instrument which may allow your father to separate a certain portion of his inheritance and hold it on your behalf. If he is considering leaving you any money, however, you need to talk to the SSA to make sure he creates the right type of trust. Specifically, he needs to put your inheritance in a special needs trust.
There are three types of special needs trusts: third-party special needs trust, the self-settled special needs trust, and a pooled asset trust. Each trust is funded and managed differently. Its important to review your situation with someone familiar with the law who can identify which type of trust would be the best for you.
What else do I need to know?
There are several other considerations before you create a trust. You must first choose a trustee who can administer the trust for you. You must also make sure that whatever funds are included in your special needs trust that they are used for your sole benefit and only to fund your basic necessities.
Although an inheritance could jeopardize your SSI and Medicaid benefits, if you understand the law and how to create a special needs trust you may be able to keep your benefits.
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