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Does Inheritance Affect Social Security Disability Benefits?

Published on February 15th, 2021

The word "inheritance" written on a small slip of paper lying on top of a row of 100 dollar bills.

When a loved one passes away, the effects that ripple outward through their social circle can be felt in many complex ways. Death is often accompanied by remembering the person’s life and tying-up loose ends relating to their estate. If the deceased left behind a substantial estate, those who are set to inherit will need to claim their inheritance and re-assess their greater financial picture.

The Effect on SSDI Beneficiaries – Inheritance and Social Security Disability

Receiving inheritance while on government issues disability benefits can have unexpected consequences for beneficiaries. However, SSDI (Social Security Disability Insurance) is only affected by wages earned through employment. SSDI is funded by the Social Security System, therefore a person’s existing or future assets have no bearing on their eligibility for benefits.

The Effect on SSI Beneficiaries – Will I Lose My SSI if I Inherit Money?

Eligibility to receive SSI (Supplemental Security Income) involves assessing a claimant’s current resources and assets. There are many life changes that can affect a person’s eligibility for SSI. These can include (but are not limited to) a change in residence, receiving assistance from a friend or relative, getting married, or inheritance.

Some SSI recipients who become aware of an inheritance in their name mistakenly believe that simply not accepting the inheritance will protect their monthly benefits. Unfortunately, this is not the case, and refusing an inheritance may only make things worse. The Social Security Administration (SSA) still views refused inheritance as a resource.

Do I Have to Report Inheritance to Social Security?

Failure to report an inheritance to the SSA violates federal regulations and could result in SSI benefits being revoked, or financial penalties.

SSI is a needs-based program for disabled individuals who are not eligible for SSDI. If a claimant’s unearned income increases and exceeds the monthly resource limit dictated by the SSA, it could leave them ineligible to continue receiving SSI benefits.

What You Can Do – Receiving Inheritance While on Benefits

If you find yourself asking, What happens if you inherit money while on disability? It may be time to work with a disability attorney in Rockford, IL. At The Crosby Law Firm, we can help you understand your options if you receive both SSI and an inheritance unexpectedly.

Setting up a Special Needs Trust or a Pooled Special Needs Trust can be a good solution for those asking, How do I keep my SSI and inheritance money?

How Do Special Needs Trusts Work?

A special needs trust includes three key roles that are played by different individuals/entities. There is the person or entity funding the trust (for example, the estate of a deceased individual), the trustee (a third party tasked with managing funds), and the beneficiary (the person receiving funds).

Once inheritance money is legally transferred to the trustee, the beneficiary can receive it in smaller payments which allows them to maintain their federal SSI benefits.

Social Security Disability Lawyers for Inheritance and Disability Concerns

Are you interested in setting up a trust, filing for SSDI or SSI, or pursuing an appeal? The Crosby Law Firm is here to cater to all of your legal needs, including concerns related to Social Security Disability and inheritance money, lottery winnings, settlements, etc. We are familiar with the various financial circumstances that can impact a person’s eligibility to receive benefits.

If you’re interested in learning more about how receiving disability and inheritance can affect your benefits, schedule a free consultation with a member of our team. Our attorneys can help by reviewing your situation and advising you on the next steps.

Call us today at (815) 397-2006 to schedule an appointment, or contact us online.

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