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Will an Inheritance Affect My Social Security Disability Benefits?

Published on February 15th, 2021

When a loved one passes away, the effects that ripple outward through their social circle can be felt in many complex ways. The stages of grief are often complemented with a celebration of the person’s life and a tying-up of loose ends relating to their estate. If the deceased person left behind a substantial estate, those who benefit from it will need to claim their inheritance and re-assess their greater financial picture.

The Effect on SSDI Beneficiaries

In some cases, an unexpected inheritance can compromise the disability benefits received by an individual. SSDI (Social Security Disability Insurance) is only affected by wages earned through employment. SSDI is not a need-based program, and a person’s existing or future assets have no bearing on their eligibility for benefits.

The Effect on SSI Beneficiaries

The requirements for SSI (Supplemental Security Income) involve a wider look at the claimant’s financial picture. There are lots of different kinds of life changes that can affect a person’s eligibility for SSI benefits, including (but not limited to) a change in their residence, receiving assistance from a friend or relative, getting married, or receiving an 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 SSI still considers refused inheritance as a resource. Furthermore, failing to report this to the SSA violates federal regulations and could result in benefits being revoked.

What You Can Do

If you find yourself in this situation, working with a Social Security lawyer in Rockford can help you understand your options. For some beneficiaries, setting up a Special Needs Trust or a Pooled Special Needs Trust will be a good solution.

How Do Special Needs Trusts Work?

A special needs trust includes three main actors: the person funding the trust (in this example, the estate of the deceased person), the trustee (a third party tasked with managing the funds), and the beneficiary (the person who receives funds). Once the money is legally transferred to the trustee, the beneficiary can receive it in smaller payments which help them maintain their federal disability benefits.

Social Security Lawyers in Rockford

Want to learn more about applying for Social Security benefits, appealing a decision made by the SSA, or setting up different types of trusts? The Crosby Law Firm is here to cater to all of your legal needs. We are familiar with trusts, wills, and the different financial circumstances that can affect a person’s disability benefits.

During a free consultation with a member of our legal team, we can help by reviewing your case and advising you of the next steps. Contact us today to schedule an appointment.

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