Do Inheritances Affect SSI Benefits?

Picture of a will and testament on a desk

Supplemental Security Income, or SSI, is a federal program run by the Social Security Administration supported by general federal tax revenues. Eligibility for SSI is not contribution-based like other Social Security benefits, meaning you don’t have to pay Social Security or other taxes to receive SSI benefits.SSI is means-based and is specifically intended to help people with limited resources and income.

However, many do not realize that the SSA may take away their benefits if they accept an inheritance.

A slight change in your income or assets could reduce or eliminate your SSI benefits. This means an inheritance could also affect eligibility for other federal benefits, such as the Medicaid healthcare insurance program.

Can You Accept An Inheritance and Receive SSI Benefits At The Same Time? 

The prospect of having to cut out or reduce  your inheritance to meet SSI’s income and resource limits can be disheartening. However, an SSI beneficiary doesn’t have to lose the benefit of her unexpected inheritance. Instead of disclaiming an inheritance, the beneficiary can accept it and then transfer the funds into a first-party special needs trust fund or a pooled special needs trust fund.

A special needs trust is an ideal asset protection tool to place an inheritance into so you can still maintain your eligibility for SSI or Medicaid. Once the assets are in the trust, a beneficiary can continue to receive SSI benefits, but the funds can be used to pay for medical and other special needs. If the beneficiary had disclaimed the inheritance, they would not only lose their SSI benefits, but they wouldn’t gain from an inheritance either.

SSI Asset Limits

All it takes is a modest inheritance to put an SSI recipient over the threshold and cause benefits to be reduced or ended. For an individual to be eligible for SSI, they must have $2,000 or less in assets, and a couple can have no more than $3,000 in combined assets. To make a financial determination, the Social Security Administration (SSA) considers both income and available or “countable” resources. This includes cash, bank accounts, vehicles, and real estate. However, it excludes your home, one car, household items, and other personal effects.

Reporting Your Inheritance

No matter how small your inheritance is, by law, you are required to report it. SSI recipients must report inheritances no more than ten days following the month they receive it or disclaim it. The Social Security Administration will regard a rejected inheritance as a transfer of assets and treat the same as if you had accepted it.

Failure to inform the SSA of your inheritance can create additional penalties. In certain circumstances, it might result in the prosecution of the beneficiary or family members managing their affairs. SSA representatives could charge you as much as a $100 reduction in benefits if you’re late or fail to report an inheritance that you receive. Knowingly failing to report an inheritance or other substantial change can result in a suspension of SSI payments for six months.

Legal Support with an Inheritance and SSI Benefits

If you or a loved one received an inheritance, contact a Social Security Disability lawyer immediately to talk about your options. At DA Michigan, our experienced supplemental security income lawyers can answer any questions about your eligibility to apply for benefits and how to make sure that you don’t unnecessarily lose them.

Call the Disability Attorneys of Michigan now for a free case consultation at 800-949-2900.

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I will never forget you and the hard work you did to secure my Social Security Disability benefits. Thank you!

- Christine C.