Inheritances for Those on Disability Benefits
Children with special needs present unique challenges and opportunities when it comes to making an estate plan.
A child – whether a minor or an adult – who is receiving Social Security disability benefits under the SSI program will lose those benefits if he or she receives an inheritance. SSI is a “means-tested” program that only pays benefits each month after the beneficiary has exhausted his or her own resources.
So, when a person who is receiving SSI benefits receives an inheritance, Social Security will stop paying benefits because that beneficiary can now use his or her inheritance to pay for the needed care. Then, when that inheritance has been exhausted, Social Security will resume the payment of benefits.
However, it is possible to structure an inheritance in a Living Trust or Family Trust in such a manner that the Social Security benefits continue unabated. This is done by means of a Supplemental Trust provision.
Fashioned in this manner, the inheritance is parceled out to the beneficiary a little bit at a time. The inheritance then becomes an enrichment resource that can raise the standard of living of the beneficiary from the normal subsistence level of SSI benefits to a more generously-enriched level.
This, in turn, allows the blessing of the inheritance for that child to be enjoyed for many years (or even decades), rather than having it spent down at a much faster rate after the Social Security benefits have been suspended.
In short, anyone who plans to leave an inheritance to a person who is on SSI disability benefits should take a serious look at a Supplemental Needs Trust as the very best way to maximize the benefits to that person.
Author: Barry Peters. For additional easy-to-understand information on Wills, Trusts, and Probate, call attorney Barry Peters’ offices at (208) 939-2600 for your expedited appointment for a FREE OFFICE CONSULTATION or visit his Q & A pages at BarryPeters-Law.com/answers-to-questions. As always, your total satisfaction is guaranteed by Barry Peters, Attorney at Law, where all clients receive individual attention to the details of their unique circumstances.