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Estate Planning for Children on Social Security Disability or Supplimental Security Income

03.11.15 written by

Social Security Disability (SSD) and Supplemental Security Income (SSI) are two governmental programs that provide monthly benefits to disabled individuals.  Since these two governmental programs have different qualifications, it is important for clients who are working on their estate planning documents to know which disability program their child is on and determine how their estate plan can affect their child’s eligibility for either of these two programs.

SSD is a disability program that is funded through payroll taxes and provides benefits to workers who have worked a certain number of years and who have paid social security taxes into the social security system.  SSD individuals are younger than 65 years old and have contributed a certain amount of funds to the social security system.  In addition, after receiving SSD, the disabled person will be eligible for Medicaid.  The SSD recipient’s spouse and children may also be eligible to receive benefits as well. 
In order to qualify for SSD, an individual must file an application for SSD.  This can be a long and drawn-out process, and the individual may not be successful right away.  However, once determined to be disabled and qualified for SSD, the benefits will then provide the individual with monthly benefits.  SSD recipients are restricted in the amount of income that they can earn, but no restriction exists in regards to the number of assets that they can own.  Therefore, receiving an inheritance will not affect their eligibility for SSD.

SSI is a disability program that has stricter requirements than SSD.  In order to qualify for SSI, an individual’s income and assets are reviewed.  SSI is funded by the general tax program and it has nothing to do with work history.  It is strictly based on financial needs.  In order to be eligible for SSI, an individual must have less than $2,000 in assets and have a very minimal income.  Once it is determined that you are eligible for SSI, that individual is then eligible to receive Medicaid payments for health care and potentially food stamps.  Unlike SSD where a five-month waiting period is required to receive the first monthly benefit, SSI benefits begin the first of the month when the application is submitted and approved.
Individuals planning for children who are on SSI now or maybe in the future, need to understand that if they give assets outright to a child who is on SSI, then that child may lose their SSI benefits because their assets have grown to over $2,000.  There are certain types of special needs trusts which can be established to hold an inheritance in order to allow the child to retain the SSI benefits.  The assets in this type of trust can be used to provide the SSI recipient with extra supplemental benefits such as recreational activities and vacations and can be used to pay for expenses that Medicaid does not cover.  An individual with a child on SSD is able to provide assets to be paid to that SSD child and the increase in that child’s assets will not make that child ineligible for SSD.

Individuals who may be eligible for SSD or SSI should contact an attorney who is familiar with these programs in order to assist them with qualifications.  Individuals who are planning their estates with beneficiaries, who may be on SSD or SSI, should understand the implications of leaving assets outright to these individuals or in trust.

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