Many individuals ask if leaving a home or an asset in their will to a loved one with disabilities will mess up their social security or other disability benefits, including Medicaid. As special needs financial planners, we hear this question often in various forms. In most cases, a home or an asset did not go into a trust first, but was left directly to the individual who is receiving disability benefits.
Considerations When a Home is Left to a Loved One with a Disability
When a home is left to an individual receiving benefits, our first question is about the future plans for the home that has been left to the individual. If an individual is living in the home and plans to live there for the rest of their life, regardless of whether it was bequeathed to them or not, it will be excluded from the asset limits of Social Security programs completely. The home can remain in the individual’s name and the benefits are safe, regardless of benefits. On the other hand, if the home will be sold at some point or the individual receiving benefits never plans to live in it, there are considerations depending on the benefits the individual is receiving.
We strongly advise against having the individual move into or stay in a home left to them that is not a good fit only to avoid any impacts on benefits. Serious considerations should be made about whether the home is the best fit for natural connections, transportation options, and safety. If it is determined that the bequeathed home is not the best option, planning for the sale of the home is important to consider.
How Social Security Benefits Can Be Affected
If the individual is on Social Security Disability Insurance (SSDI) or the Disabled Adult Child (DAC) benefit, they will not lose any cash benefits. There is no asset limit to the SSDI because it is a government insurance program based off the individual’s or the individual’s natural parents’ work earnings record. To qualify for SSDI benefits, either the individual worked enough quarters to qualify based on their own earnings, or their disability existed prior to age 22 and one or both of their parents became disabled or retired (the DAC benefit). If the individual does not qualify for SSDI or the DAC benefit, and they are still receiving only Supplemental Security Income (SSI), the benefit may now change to be the Disabled Adult Child benefit off of a parent’s work record if they worked enough credits to be insured for the Social Security death benefit. SSDI and the DAC are both safe from any kind of property ownership. These situations would not be affected by having a home or asset bequeathed to the individual with disability benefits.
What Other Benefits Can Be Affected?
It is important to know what other benefits an individual is receiving. If the individual is on SSDI or the DAC, they may also be on Medicare and will have ways of remaining on Medicare for the rest of their life. However, is this individual receiving any supports from Medicaid? This could include supports such as: housing supports, work supports, or mental health support through a waiver from the state the individual resides. These benefits might have a more restrictive asset limit and are the most important benefit to consider when reviewing assets and income limitations.
To reiterate , a house an individual lives in itself is excluded from these asset limits. That house would pose no issue. But, if an individual does not live in that house, or there are plans to sell the house, this could impact SSI and Medicaid benefits.
What Can I Do to Make Sure That Benefits are Not Impacted?
The first step would be to work with a qualified attorney or financial planner who specializes in this area and make sure you know all of your options. SSI gives an individual three months to purchase a new home if it is sold without changing benefits or eligibility. Titling the home in a supplemental needs trust is ideal to avoid the time crunch, but the best option would be to find a way to title the home in a third-party trust (a trust that someone other than the individual establishes for their benefit with their own contributions). The consequence of having a first-party trust (where the individual directly deposits assets into the trust structure) varies state-to-state, but typically there is a concern that at the end of the individual’s life, the trust will owe Medicaid money to the extent that services were received throughout their lifetime. Any trust document should allow for the holding, sale and purchase of a home.
The best thing to do is to not panic and to contact a professional who has experience with government benefit programs, such as Planning Across the Spectrum. This will allow you to continue to evaluate the best ways an individual can share their own perspective on the way they want to live their life.
This post was written by Planning Across the Spectrum, a sponsor of the Autism Housing Network. They specialize in providing certified financial planning advice and services to those with special needs and disabilities, including autism. We are fortunate to have the opportunity to share their expertise with our readers. Watch the financial planning videos as they are released here.
Looking for housing for adult yeah 23
My 37 yr old autistic son wants to live on his own. Trying to figure out how he can do that with the little amount he receives from SSI