Some commonly asked questions.
My son receives disability benefits from Social Security. I heard that if I gave him a gift or left him money in my will he will lose his benefits. I really want to leave some money to my son, is there a way to do this without causing him to lose his Social Security?
There are several different types of benefits available from Social Security. The only Social Security benefit that would be affected by a gift or an inheritance is Supplemental Security Income (SSI), which is a needs based program. If your son is receiving another form of Social Security benefit, which are referred to as entitlement benefits, he will not lose his benefits if you give him a gift or inheritance.
Because SSI is a need based program it has rules about how much property a person can have (resources) and how much income (including gifts and in-kind support) they can receive and still qualify for benefits. It is still possible to give gifts and leave an inheritance for your son without disqualifying him for his SSI, but it must be done within the rules that have been established for that program.
Gifts. You cannot give your son cash gifts, or pay for his food and shelter without causing at least partial disqualification from his SSI benefits. These gifts or support are counted as income or in-kind support that will reduce or disqualify your son’s SSI. There are, however, goods and services which you may purchase for him that will not cause a loss or reduction in benefits from SSI. For example, you could purchase a cell phone for your son and pay his monthly service fees directly to the cell phone company. Chapter 21 of the Social Security Handbook has more detailed information about what you can provide to your son.
Because the rules are quite complex, you should consult with an attorney with public benefit experience if you are unsure whether a gift will disqualify your son from benefits. Your son’s medical coverage may be dependent upon his remaining qualified for SSI.
Inheritance. You can leave an inheritance to your son without disqualifying him for SSI, but it will take some advance planning. You can create a Special Needs Trust (SNT) for your son, to be funded upon your death, through your estate plan or you can create a SNT now that can hold monetary gifts or inheritances from yourself and others for your son. A properly drafted SNT will not be counted as an available resource for SSI, but the distributions from the trust will be counted as income, unless care is taken to make the distributions in the manner described in the Gifts section above.
If your son has already received a gift or inheritance, it is not too late to preserve his SSI benefits. Your son or his conservator/guardian can petition a court to create a SNT. This SNT will have different restrictions than one that you could have created for him.
* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.