According to Federal Reserve data, it’s estimated that the average American household inherits $46,200, with some inheriting less and few inheriting more.
Of those who inherit money, a few are claiming Social Security Disability Insurance (SSDI). If you are one of these individuals, you might be concerned about whether or not you can continue receiving SSDI.
Since an inheritance can be a life-changing amount, it’s only natural to worry you can’t secure it while receiving SSDI. To help ease your mind, the Dyer, Garofalo, Mann & Schultz team has put together this SSDI and inheritance guide. If you need assistance after learning more, you can speak with one of our Ohio attorneys with experience in inheritance law and SSDI.
Let’s begin by refreshing your memory on SSDI benefits before discussing whether you can inherit money and still claim them.
Simply put, SSDI is the amount of money awarded to an individual by the government if they have become disabled. This amount is awarded through an individual’s previous payroll payments to the Social Security trust fund.
This fund is known as FICA and stands for the Federal Insurance Contributions Act. You might be eligible if you did not contribute to the fund, but your spouse or other family member did.
If you want to claim SSDI, you cannot simply fill out paperwork and expect it to be paid into your account monthly. Instead, you must first determine eligibility according to the Social Security Administration’s definition of ‘disabled.’ If this is something you have not yet done, you might want to speak with one of our attorneys.
Yet, how much should you expect to receive, and will it be more than an inheritance? This is dependent on how much you’re expecting to inherit. If you are set to inherit the US average or slightly more, it’s likely that SSDI will pay more in the long term, but this doesn’t necessarily mean you must forgo the one for the other.
According to data, how much you will earn through SSDI depends on your lifetime average earnings, which the SSA calculates. This amount can be awarded to you or given to children or a spouse. In addition, you should note that SSDI benefits can be reduced should you receive workers’ compensation benefits.
To determine if you can claim SSDI and inheritance, you must establish the type you’re expecting.
Below, we’ve defined what the SSA defines an inheritance to be. You will notice that each of the below is considered a ‘death benefit’ and not income, which affects claiming an inheritance and SSDI:
However, it should be noted that an inheritance can include one or more of the above items, and the total value can affect your SSDI benefits. Luckily, an attorney specializing in Social Security benefits can help give you insight into the matter.
Now, to get to the crux of the matter and answer the question on your mind. Ultimately, receiving an inheritance will not affect your SSDI benefits like receiving workers’ compensation benefits would. This is because your SSDI is funded by your contributions while working, and no amount of money inherited will affect this.
In addition, part of the reason why your SSDI benefits are not affected is that additional revenue and income are not considered when average lifetime earnings are calculated.
Our legal team at Dyer, Garofalo, Mann & Schultz thought it prudent to explain the difference between SSDI and SSI as they have different legal inheritance rules and are often believed to be the same thing.
Although both SSDI and SSI are disability benefits programs, they are different. An SSI program is needs-based and is for those who have not paid into the SSA system. These individuals are not entitled to continue receiving SSI benefits if they claim an inheritance.
In contrast, an SSDI program, as we mentioned earlier, doesn’t affect an individual claiming their inheritance. This is because those who have paid into the SSA via their paychecks prior to becoming disabled have paid a type of ‘insurance’ and have access to it regardless of whether or not they claim an inheritance.
If you’re claiming SSI benefits and have come into an inheritance or will soon receive it, you should speak with an attorney at our law firm. We can help you learn more about the legal and ethical ways to protect your inheritance and benefits.
According to Ohio laws, you don’t need to report an inheritance to the Social Security Administration even if you receive SSDI benefits. By law, only individuals receiving Supplemental Security Income benefits must report earned or unearned income to the SSA.
This is because Supplemental Security Income is known as a needs-based program, and those receiving these benefits aren’t allowed to possess more than $2,000 in assets. Those who are claiming these benefits as a couple cannot possess more than $3,000 in assets.
So, if you are enrolled in the SSI benefits program and receive an inheritance of more than these amounts, you will need to report it.
Although speaking with us would be best if you’re receiving SSI benefits and are soon to be on the receiving end of an inheritance, we want to give you an idea of the legal ways to protect your inheritance. Have a look below to learn of the ways you can receive your inheritance while holding onto your SSI benefits.
One of the popular ways individuals hold onto their SSI benefits while receiving an inheritance is by opening an ABLE account. This type of account is only accessible to disabled individuals because it is tax-deferred.
However, there is a catch. An ABLE account is only available to individuals who have become disabled before age 26, and the person must have a qualifying disability. In addition, this type of account has annual contributions caps.
According to 2023 data, the cap is $17,000, and only family members like parents, aunts, uncles, siblings, and a spouse or a representative payee can deposit money into this account. So, if you are going to receive an inheritance, it can be arranged to be paid into your ABLE account as long as the cap is not exceeded.
Yet, there are a few other limitations. For example, you are only allowed to be in possession of one ABLE account, and the funds in the account need to be used for the benefit of the account holder (you).
One of the most popular ways of maintaining SSI benefits while still being eligible to receive an inheritance is to utilize a special needs trust. This type of trust is established for those who need to preserve their inheritances since family members can gift money and other assets to those deemed special needs.
However, the assets deposited in this trust have to be used to help improve an individual’s (your) quality of life. It’s also important to note that once assets are placed in the trust, you won’t have control over them, nor will the beneficiary. An attorney must name a trustee to administer this type of trust.
Moreover, it’s crucial to note that, unlike a pool trust, a special needs trust cannot be added to once a person turns 65. It’s in the individual’s best interests to hire an attorney to set up the trust to ensure their SSI benefits are not compromised.
Unfortunately, there are instances where an individual stops receiving their SSDI benefits because they have received an inheritance. Since this is illegal, it’s in your best interests to seek out the services of an attorney from our firm if yours has been terminated, paused, or denied.
A disability benefits attorney will work with you to appeal your case and get your benefits resumed or approved. It’s important to speak with an attorney as soon as possible, as there is a 60-day period from the decision date within which you can file an appeal to have your benefits reinstated or approved.
In addition, you should note that there are four appeal levels you will need to pass. These are known as the reconsideration period, hearing period, appeals council review period, and federal court review period.
Evidently, SSDI and SSI benefits have some impact on your inheritance, but their impact will depend on your unique case circumstances. If you are receiving either of these benefits and are set to receive an inheritance, it might be time to turn your attention toward hiring a skilled Ohio social benefits attorney at Dyer, Garofalo, Mann, & Shultz.
Our Ohio attorneys have experience handling these cases and will work alongside you to ensure you are treated fairly as per the law without losing out on your inheritance. So contact us here and let us help you preserve your benefits and inheritance today.
Before establishing Dyer, Garofalo, Mann & Schultz L.P.A., Doug Mann, a top Ohio Injury Attorney served as a bodily injury claims adjuster at a major insurance firm. With over 40+ years of experience, Doug’s background has proven invaluable in securing maximum cash settlements for his clients swiftly. Since leaving the insurance industry, Doug has devoted his entire legal career to assisting injured clients during their times of greatest need.
This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by Founding Partner, Doug Mann who has more than 20 years of legal experience as a practicing personal injury attorney.
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