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Will inheritance affect my Social Security Disability Insurance (SSDI) payments?

Continued eligibility for Social Security Disability Benefits is dependent on many different factors. These include your ability to work, your living situation, and any income and resources you have earned. However, the two disability benefit programs—SSI and SSDI—vary. What may disqualify an SSI recipient may not disqualify and SSDI recipient. Today we will be answering a question about the effect of inheritance on a person’s Social Security Disability Insurance benefits.

If you have a question that you’d like us to address in a future blog post, please leave it in the comment section below or contact us through Facebook, Twitter, or Google+. Today’s question is:

Will inheritance affect my SSDI benefits?

If you are a Social Security Disability Insurance (SSDI) recipient and receive an inheritance, it will not affect your benefits. SSDI is not a needs-based program and is not contingent upon your unearned income—including inheritance.

The only income that may potentially affect your SSDI benefits is any wages that you earn through employment. If you engage in Substantial Gainful Activity (SGA), your monthly payments could be lowered or eliminated as a result. In 2014, SGA is considered to be earning $1,070 or more in one month. If you begin working while receiving SSDI benefits, then it is necessary to report this income to the Social Security Administration (SSA).

However, if you are receiving Supplemental Security Income (SSI) benefits and have recently inherited funds, your benefits may potentially be affected. This is due to the fact that the SSI program is based on financial need. Any income, earned or unearned, can affect your benefits. Therefore it is imperative to inform the SSA of any changes to your income. You have up to ten days following the end of the month in which the change occurred to report the change.

Comments

What happens when a person dies that's on retirement and has a son under18yrs old would that child still be eligible for any money and how much.

Hi Tracy,
Because you are on SSDI benefits, you will not have any issue with inheritances.

Hi John,
SSDI does not have limits on unearned income, so you do not need to report it.

Hi Jane,
You're right! When you reach full retirement age, your benefits will convert to retirement benefits.

John Doe has been receiving SSI benefits for 12 years. 6 years ago, John's father died, his house was sold, John received $100,000 cash inheritance which he put into the bank in an interest bearing account. John consulted a CPA at the time of the inheritance asking whether he should advise SSI of the inheritnce. The CPA said "no". John did not report the inheritance and continued to receive SSI benefits including Medicaid and food stamps. Since the inheritance occurred, John did report the interest income from the bank account to SSI, indicating John did not try to hide the inheritance. Now, 6 years later, SSI noticed the interest income from the bank account, questioned John (who told them the truth). SSI cut off all benefits and is saying John has to reimburse for all benefits received since the inheritance. Is this correct? What is the CPA's position in this? Comments and guidance will be appreciated.

Hi E.J.,
Yes, John has become ineligible for SSI benefits due to the interest. If he were on SSDI benefits, this would not be an issue. I do not think the SSA will say that he is excluded from disqualification due to the CPA's false advice. He can consider suing the accountant, but I have no idea if this is a valid option or if he could make a case. It's likely the CPA made a genuine mistake and did not understand SSI benefits.

Reading your reply, you seem to be saying John is ineligible for SSI benefits because he collected INTEREST on his inheritance he put into an interest bearing account. Wouldn't his receipt of the inheritance make him ineligible?

Thanks for your comment, Betty! Since John is on SSI, which is a need-based disability program meant for those who have little or no income or resources, the interest of his inheritance affected the "need-based" to qualify for SSI benefits. Hope this helps!

I am on ssdi, my father died in October, we have recently found out that my mother, his ex-wife is not in divorce decree to get the policy, so it is to be split up 4 ways, between me and my 3 siblings. Will this affect me? If so, what our my options?

Hi there,
So sorry to hear of your fathers' death. I do not think you have many options here. The only benefits you could be eligible for are the spousal benefit (around $200) and receiving any back pay he was entitled to. I don't think you can have it so one sibling receives more than the other or anything like that.

I am receiving SSDI benefits. I have some US savings bonds that were purchased for me as a baby. Do these have to be reported and will the amount be subtracted from my benefits?

Hi Mike,
So long as you receive SSDI benefits and not SSI benefits, no problem.

My friend is not too savvy with real estate or ssdi rules. I am also on medicare and ssdi.
She co- owns a distressed home w her sister left in a will. The sister is awaiting another family home, agreeing to sign hone to my friend so she can sell it. Can she retain her ssdi entitlements upon sale of an inherited property?

Hi Maureen,
Yes, your friend may still be able to sell the property while keeping SSDI benefits, as those benefits are based off of her work record, rather than her income or financial resources.

My parents left me property,which is for sale,wen the property sells will the inheritance property affect my social security disability?

If my diabled sister forfiets her quarter of her inhertance (home where she lives) to my brother who lives with her, would that then be a "value" asset and jeopardize her benefits. Not sure if she gets SSI OR SSDI?

Hi Cindy,
Well, I really cannot help you if you don't know what type of benefits she's receiving. Any inheritance will not matter if she's on SSDI, but she could be disqualified completely if she's on SSI.

My son, who is 12 receives ssi. My father just passed & left approximately 14000 in life insurance to me. Do I need to report this & will it affect my son's ssi? If so, how much the amt of money will only go so far.

Hi Lo,
This is a spectacular question! It could affect your son's eligibility. You should definitely contact the SSA worker who handles your case to determine whether or not he will become disqualified from SSI benefits.

Hi my brother is on SSI. In 2014 we both received checks from my deceased mom's retirement contributions. Under $5000. My mom passed in 2003. My brother signed his check over to me to help pay my debt as I had a newborn and ws out of work for 7 months. I just received an unofficial letter from SA asking about these funds. Isn't my brother entitled to transfer his money?

Hi Helen,
The issue is that if your brother has more than $2,000 in assets, he will no longer qualify for SSI benefits. So if he received more than that through the inheritance, he might not be able to receive them. If he received less, he could be fine.

Hi Marie,
It would! I'm not sure about the land inheritance itself, but the proceeds from its sale would be counted towards the income and asset limits for SSI benefits.

I understand that an inheritance from my Dad passing won't affect my SSDI benefits BUT does it make a difference if the funds came from a mutual fund account that he had where my siblings and I were named beneficiaries? I received a form from the mutual fund company for tax purposes but I am just wondering if when I am calculating on the back of the form that Social Security sends each year to see if I do have to pay taxes on my SSDI payments and I add my inheritance funds to the total it still says I don't have to pay taxes? Do I need to report this to Social Security?

Hi Theresa,
I'm sorry for your loss. I'm not sure if you would need to pay taxes as I don't know how much you are receiving, but it would depend if the money from the mutual fund is considered income or not. I would definitely confirm this with the SSA, their number is 1-800-772-1213

If I receive SSI and I inherit a million dollars do I have to pay back 15 years I was on SSI and my SSI Gats discontinued

Hi Ralph,
You would not have to pay back the SSI benefits that you have received, but because the million dollars is over the income and benefit limits for SSI, you would experience a loss of benefits because of the inheritance.

Hi Mike,
It may affect your SSI benefits, as there is a benefit limit for SSI. If this inheritance puts you over the $3000 benefit limit for families, you may be ineligible for benefits.

I started receiving royalties from my brother's estate in Nov. 2012 and Feb. 2013, which at that time I reported to the social security administration because I do receive SSI. However, they (ssa) called me 2/17/16 to address this issue. My issue is that I did the right thing and then two years or more later, I am being handled like a criminal? Is there any legal recourse after I had done the right thing by reporting these circumstances, because now they are treating me like I did something wrong, even though I informed them of my receipt of royalties from my brother's estate! Someone, please advise?

Hi Dyrel,
I am not sure what you should do in this situation! If you reported the payment, you should not have to lose your benefits. If the SSA is demanding some type of repayment and you can afford it, I always recommend to just do it, just to make sure you keep the benefits and health insurance you need.

Hi, I had a severe brain hemorrhage, caused by an AVM, in 1997. I had 1 brain surgery the day it happened and a second surgery the next day to remove more blood clots and more damaged brain tissue. My girlfriend was the one who realized I was even having a life threatening problem happen. I just thought I was having a really bad headache. My girlfriend called 911 and got me to the hospital in time for the surgeon on call to do anything. My girlfriend did not have any legal power to make decisions for me so she called my Dad and brothers to inform them that there had been an emergency and that I was in surgery. My oldest brother immediately out a "no code blue" on me and got mad at my GF for allowing surgeries to take place without his consent. 5 days later my family managed to have me removed off all life support because they claimed they could not deal with the situation. Meanwhile, the took all my valuables out of my home and completely drained my bank accounts. Obviously, I did not die. My family walked away but my GF stood by me and helped me go through absolute hell to even get to the point that I am now. After my brother realized I was not going to die right away, he somehow got me a small amount of money coming in each month from SSA. My question is; how can I find out if I am on SSI or SSDI? I get a direct deposit of about $700 each month and I get a Form SSA-1099 Social Security Benefit Statement. It does not say on it waht kind of benefits i am actually recieving. My GF has been taking cnr of me for the last 19 years. but she has never been able to find out anything for me either as it seems my oldest brother, who I have not even seen in the past 15 years, has all the info about me. What can I do, or my GF do, to find out if I am getting SSI or SSDI? (GF has helped me type this, but words and Q's are mine)
thank you!

Hi John,
I am sorry to hear that! I am actually not sure how to find this out because the benefits you're earning are low enough to either be SSDI or SSI. Have you worked before? What you could do is log into your My SSA account on www.ssa.gov to see your benefits. If you don't have an account yet, you can just make one so long as you know your Social Security number.

I have a durable power of attorney for my mother. She wants to gift the maximum amount of money this year--$14,000-- to each of her children, one of whom receives SSI. How much money may that adult child be gifted, if any, without posing a risk to his benefits? Eventually, each of us may inherit a large sum. Should we consider contacting an attorney to establish a Special Needs Trust?

Hi Beck,
The maximum resource limit for SSI benefits is $2000 for individuals and $3000 for families. If they have more than that in savings, your sibling would become ineligible for benefits. Because this is the case, a Special Needs Trust may be a good option to ensure that your sibling is gifted that money without a change in his or her benefits.

My friend is on ssi and his mother was the executor of his account on his behalf. She had just passed and his family will be selling their house and spending the money. If he gets a $15,000 what should he do with the money and should he reported to SSI? He is 60 years old, because of his mental state and his mother's death what will happen if his SSI?

Hi Bob,
Yes, your friend should report the income to the SSA. I could not tell you what he should do with the money, but there are income limits for SSI benefits, ( $2,000 for Individuals and $3,000 for families), and if your friend goes over that limit he may become ineligible for benefits.

My father in law involved in car accident. He may receive a lump sum (over 2000.00) from Insurance. If he receives this fund, will he be disqualified for SSI benefit.

Hi Nee,
I'm sorry to say that if this lump sum puts him over the resource limits ($2,000 for individuals and 3,000 for families) then yes, that lump sum may make him ineligible for SSI benefits.

HI I am on ssdi and my father died in October last year. He left my brother and I a retirement IRA. Will they take my disability payment away because of this inheritance.

Hi Vanessa,
I'm very sorry for your loss. Inheritance is not considered earned income, and does not count against your income limits for SSDI, so you should not lose benefits by receiving the inheritance.

I'm collecting SSI and my mother just died. I think I may receive an inheritance of some sort but want keep my benefits. Do I have to take the inheritance?

Hi Lili,
If you do take it and it does not put you over the asset limits for SSI, you would only lose benefits for the month that you received the inheritance, as it is counted as income when you report it to the SSA.

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