Managing SSI benefits and Inheritance

[Elder_Engineer]

What is the name of your state (only U.S. law)? New Mexico, U.S.A.
I am assisting my mentally challenged sibling with their benefits. Recently we were notified that an inheritance from our aunt was in process. In order to not lose here SSI and medicaid eligibility, we decided to disclaim the inheritance rather than lose benefits then have to reinstate them. The disclaimed inheritance (as if pre-deceased) would then transfer to an adult daughter. The person who drafted the disclaimer felt this was legal and appropriate as long as funds were used by daughter as she wished. The estate attorney felt that we should reconsider and that this could be construed as SS fraud. The local SSI office was consulted and they did not see an issue if disclaimed but the person was not an attorney and not sure if one person in one office is always the best of sources. I need some tie-breakers to find out if disclaiming as if predeceased is legal and acceptable practice. Please help here. Another avenue is to accept funds and have SSI recipient purchase a home which is not included in resources. If this happens, is this indeed true that one can purchase a home an not have it count toward ineligible resources? One small detail is the estate dragged their feet getting notices out to heirs and by the time we received notice, more than nine months had passed from time of death.

 

[Onderzoek]

1. Definition
An inheritance is cash, a right, or a noncash item(s) received as the result of someone's death.
https://secure.ssa.gov/apps10/poms.nsf/lnx/0500830550!opendocument



3. Transactions that can result in valid transfer
Valid transfers of resource ownership may occur through any of the following types of transactions:
Sale of property;
Trade or exchange of one property for another;
Spend-down of cash;
Giving away cash;
Transferring any financial instrument (e.g., stocks, bonds);
Giving away property (including adding another person's name as an owner of the property);
https://secure.ssa.gov/apps10/poms.nsf/lnx/0501150001!opendocument

I think it is possible for SSI to consider that your sibling gave away an asset that belonged to him (the value of the inheritance) in order to qualify for SSI and Medicaid and there can be a period of ineligibility for one month to up to 36 months. I have given you references above.

How much money are you talking about? What is wrong with using that money for living expenses and medical bills for as long as it lasts and reducing dependence on taxpayer dollars? The aunt apparently wanted this SSI recipient to have the money. If the money is gone within 12 months of receipt, all that is needed is proof of how the money was spent (not given away) to reinstate. If it takes longer than 12 months, a new claim and a new finding of disability (which may not be the same as the last claim) is required.

The inheritance will be income in the month it is distributed by the estate, not the month of death. It becomes a resource the first of the next month. If the money is then in an excluded resource, the value will not matter.

How much money are you talking about? Why not buy a home if none is owned now? Why not set this sibling up for a better future by purchasing newer furnishings, newer appliances, fix the roof on the house he/she owns? A better car, a medical device not covered by Medicaid? Why not let your sibling enjoy the aunt's legacy?

 

[Elder_Engineer]

Thank you Onderzoek

Thank you for the ideas and thoughts. I like the home purchase idea as this limits the time of ineligibility to a short period. The biggest concern is medicaid coverage and any gap in coverage during the ineligible period. If the period is short, then that minimizes that risk. It appears that there is not a restriction to buying a home after benefits have started and also not a limit to the amount invested in the home. This may indeed be the best route. Upon her death, the state may impose a lien on the house to recover medical expenses but that would not be an issue at that point.

Thanks again. If there are other ideas, I am open to hear them.

 

[Elder_Engineer]

Supplemental Trust

In review, I am not sure she can manage home ownership both financially and mentally, and may best utilize a supplemental trust which could help ensure she has funds for items beyond SSI and medicaid. No issue with trust funds going to government if she passes before funds are utilized. What is maintenance and upkeep for a trust and trustee? Is this a good avenue and even possible in this case?

 

[Onderzoek]

If the aunt had established the trust, you would have a better chance of having it excluded. Once the inheritance passes to her and she sets up a trust, then it becomes a trust made from her own money and may not be excludable.

You need to talk to an attorney who specializes in Medicaid to get a better answer. Not just any attorney.