How Does An Inheritance Affect Social Security Disability Benefits?

If you receive or are applying for Social Security disability benefits, you need to know how an inheritance may affect your eligibility. Whether or not the money that your wealthy uncle left for you in his will affects your SSD benefits depends to a great extent on the program through which your benefits are paid.

Eligibility guidelines for the Supplemental Security Income programs differ in their treatment of money or property that you receive through an inheritance. The information provided in this article can help you anticipate inheritance issues that require the assistance of a disability advocate at London Eligibility.

Inheritances and SSDI benefits

The money you inherit from your late uncle will not affect the SSD benefits that you receive through the SSDI program. To qualify for benefits through SSDI, you must be disabled and have an earnings record showing that you contributed to the Social Security system through the taxes paid on your income from a job or through self-employment.

Sources of income generally do not affect eligibility for SSDI unless they demonstrate an ability to engage in substantial gainful activity. If you have more than $1,350in income from working in a month in 2022, Social Security may determine that you are engaging in substantial gainful activity and are no longer disabled. The monthly income limit is $2,260 if you receive SSDI because you are blind.

Money that you receive through an inheritance would not be treated as engaging in substantial activity, so it would not affect your eligibility for SSDI. However, if you qualify for SSI benefits either independently of or together with SSDI, an inheritance may reduce or eliminate what you get each month from SSI.

SSI eligibility and inheritances

If you receive SSI benefits, an inheritance may affect your eligibility even though it would not be a factor for someone receiving SSD benefits through SSDI. The key characteristic distinguishing SSDI and SSI from each other is financial need. SSI is a need-based program that sets restrictions on the amount of income and the value of resources you may have available. SSDI does not limit income or the value of assets you own other than the substantial gainful activity income limit.

Federal regulations limit the value of resources to $2,000 for an individual applying for or receiving SSI and $3,000 for married couples where both parties are eligible for benefits. If you receive SSI, income from other sources that can be used to acquire food or pay for shelter it may reduce your monthly benefit or make you ineligible for benefits.

SSI classifies income as either earned or unearned. Income earned, such as the income you receive through a job or self-employment, cannot exceed $1,767 a month in 2022 for an individual to be eligible for SSI. Couples may earn as much as $2,607 monthly.

Unearned income, such as money received through an inheritance, may not exceed $861 a month in 2022 for individuals or $1,281 for eligible couples. The allowable earned income limits are higher because a greater portion of it is excluded under SSI regulations.

Complications associated with inheritances and SSD benefits

Federal regulations define an inheritance as any cash, right or noncash item you receive through the death of another person. If you receive an inheritance, you must report it within 10 days to Social Security to avoid an overpayment of SSI benefits. However, when to report it can be difficult to determine.

According to SSI regulations, an inheritance does not have a value that needs to be reported until the first month that it can be applied toward meeting your need for food or shelter. This happens in one of the following ways:

1). The date an estate is closed.

2). The date that you receive the inheritance.

However, some states allow someone to sell or transfer their interest in an estate to another party. In those states, an inheritance may have a value and be reportable to SSI before you receive it or before the estate is closed.

If you receive an inheritance and do not report it as income or a resource to SSI, you may be required to repay SSD benefits that the inheritance made you ineligible to receive. You have the right to appeal a determination that you were overpaid and submit evidence showing that the value of the inheritance did not put you over the resource or income limits, but a consultation with an SSI disability advocate can provide more information related specifically to your situation and circumstances.

Contact an SSD disability advocate for advice and representation

When you have questions about SSDI and SSI, a disability advocate at London Eligibility has answers and options. Whether submitting an initial application for SSD benefits or appealing the denial of a claim, the representation and advice of an SSD advocate from London Eligibility makes a difference. Contact us today for a free consultation.