While many people cherish the idea of receiving an inheritance from a loved one or relative, what they typically don’t think about are the tax and other implications that may arise once they’ve legally taken ownership of the gift. This is especially pertinent to those receiving Supplemental Security Income (SSI) benefits – a program with strict income and asset rules that may come into play should someone receiving benefits come into ownership of even a modestly-valued gift.
Income and Asset Limits for SSI Recipients
SSI mandates that any recipients of benefits must have assets of $2,000 or less as an individual or $3,000 or less as a couple. For income, the Social Security Administration (SSA) requires that recipients earn $803 per month or less as an individual or $1,195 or less as a couple. (There is another instance considering “earned income” where those numbers rise to $1,651 and $2,435, respectively, but those are based on specific income situations.)
How This Affects an SSI Recipient
In short, if the recipient directly inherits anything of value over these thresholds, it would make him or her ineligible as their total asset ownership would be too much. One potential way around this is to open a special needs trust in the recipient’s name, place any inheritance or gifts in this trust and let the will’s trustee manage the release and allocation of these resources in a way that the SSI recipient can still receive benefits. One example notes that the trust can pay for food and shelter, which would reduce an SSI payment to no more than $260 per month.
How ABLE Accounts Can Help SSI Recipients
The Achieving a Better Life Experience (ABLE) Act of 2014 created a new savings program for qualified people with disabilities and allows them to have a set-aside account to pay for certain ongoing expenses. The value of these accounts does not affect SSI eligibility if the total value of the account is less than $100,000. If the value is above this, the SSA will suspend payments until the value of the account is below that threshold. This program may be an option for parents or guardians of beneficiaries who have modest, mostly money-based gifts they’d like to set aside for their disabled children.
Looking after the well-being of an SSI recipient and working through the financial challenges of making sure they get their benefits can be tough. The team at Bevill & Bevill understands these unique circumstances and are here to offer guidance and trusted Social Security claims advice. Call us today at (205) 221-4646 to learn more and schedule a free consultation.