You have spent years making sure your child with autism has everything they need to thrive. What happens, however, when a well-meaning relative wants to leave them something in their will? It is a generous act, but without the right plan in place, an inheritance can accidentally cut off the very government benefits your child depends on every day.
This risk exists because the Supplemental Security Income (SSI) is a needs-based federal program with a strict asset limit. To qualify for this assistance, your child cannot own more than $2,000 in cash, bank accounts or other properties.
A direct inheritance can suspend your child’s benefits
When an inheritance lands directly in your child’s name, it can put their SSI benefits at risk. In the month the inheritance arrives, the Social Security Administration (SSA) counts it as income, which can reduce or eliminate that month’s SSI payment.
If the funds remain in your child’s account the next month, they become a countable asset. Pushing past the $2,000 threshold can suspend both their SSI payments and Medicaid coverage. You are also required to report the inheritance to the SSA by the 10th day of the following month, and missing that deadline can lead to additional penalties.
A special needs trust can protect your child’s benefits
The good news is that your family does not have to turn down an inheritance to keep your child’s benefits safe. Instead of leaving money directly to your child, a relative can set up a Special Needs Trust and leave the money there instead.
Because the trust, not your child, is considered the legal owner of the assets, the SSA does not count it against the $2,000 limit. Your child keeps their SSI and Medicaid, and the funds can still be used for things their benefits do not cover, such as therapies or specialized equipment.
Another option worth knowing about is an INvestABLE Indiana account, a special savings account that lets families set aside money for a loved one with disability. Funds saved in this account do not affect SSI eligibility.
The right plan makes all the difference
Every family’s situation is different, and a single procedural mistake can lead to a sudden loss of healthcare coverage. Discussing your family’s specific goals with a qualified professional can help ensure your planning fully protects your child’s well-being.