If you are fortunate enough to receive an inheritance from a loved one, you need to determine the effect of that inheritance on any type of benefits you are receiving. If you are only receiving a retirement benefit from your previous employer, the receipt of an inheritance will not have an effect on those benefits. However, an analysis needs to be done to determine how an inheritance may affect Social Security, Social Security Disability (SSD), or Supplemental Security Income (SSI) benefits.
Social Security is a governmental program which provides a monthly check to you because you are retired and over the age of 62. In addition, you will also receive Medicare benefits at 65 years of age and over, as well. Social Security is not a means tested program, which means that your eligibility for Social Security is not affected by any receipt of assets or income that you receive from an inheritance. Therefore, if you are receiving Social Security, receipt of an inheritance will not have an effect on your Social Security payments.
Social Security Disability is a governmental program which you can receive no matter what your age if it is determined that you are disabled and no longer capable of working. If you are receiving Social Security Disability benefits, you are also most likely receiving Medicare benefits, as well. Social Security Disability, like Social Security, is not a means tested program. Therefore, your Social Security Disability benefits will not be affected by any change in your assets or your income. Furthermore, receiving an inheritance will not have any effect on your monthly Social Security Disability benefits.
The Supplemental Security Income governmental program provides benefits to disabled adults and children who have limited income and resources. Individuals receiving Supplemental Security Income are also most likely receiving Medicaid benefits as well. Some individuals actually receive both Supplemental Security Income benefits and Social Security Disability or Social Security benefits as well. Supplemental Security Income is a means tested program, and therefore, any changes in the amount of assets that you own or changes in the amount of income that you receive from an inheritance may affect your monthly Supplemental Security Income benefits.
If you are going to be receiving an inheritance, you must report this to the Supplemental Security Income program within 10 days after the end of the month in which you receive the inheritance. In order to obtain Supplemental Security Income benefits, you can not have assets worth more than $2,000 if you are single or $3,000 if you are married. Therefore, an inheritance which increases your assets above these levels may have a negative affect on your Supplemental Security Income benefits. In the month that you receive it, your inheritance is considered income and if you do not spend the inheritance in the month you receive it, the inheritance will be considered a resource in the following month and every month thereafter that you still have it. Therefore, if you are receiving Supplemental Security Income benefits and a family member is going to name you as a beneficiary of his or her estate, the family member needs to establish a special needs trust for you. If the family member does not establish a special needs trust for you, you will need to spend the inheritance in the month you receive it in order for the inheritance not to have a negative affect on your Supplemental Security Income monthly benefits.
If you have any questions regarding these matters, please contact your estate planning attorney.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.
James F. Contini II, Esq.
Certified Specialist in Estate Planning, Trust & Probate Law by the OSBA
Krugliak, Wilkins, Griffiths & Dougherty Co., LPA
158 North Broadway New Philadelphia, Ohio 44663
Phone: (330) 364-3472 Fax: (330) 602-3187