Adoption Assistance and Social Security Death Benefits

[NizhoniSeattle]

What is the name of your state (only U.S. law)? AZ

We adopted our daughter in Arizona. We receive Title IV-E adoption assistance from Arizona. Their definition of this assistance in their policy handbook is for use of "adoptive parents to assist with extra expenses involved in the care, time and supervision of a special needs child." I view this assistance as help for the parents. The payment is paid to me and my husband. We use the money for multiple therapies, tutoring and extracurricular activities. She has Fetal Alcohol Syndrome and requires a lot of help and support. We love her to pieces and would do this for her without the money.

Recently, our daughter's biological father passed. He had been active in our lives and he was specific about our daughter receiving his death benefits. Sadly, he had been sick for some time. We are being told that we can not receive both benefits, only the difference between the two. The way we understand a death benefit is that it is for the child. Her biological father wanted our daughter to go to college and the intent was to save this money in a college fund. The check we have received is made out to our daughter's name.

The reasoning we have been given is that both funds "come from the same pot." This was told to us by the Adoption Assistance agency in Arizona. That is not a legitimate answer for us. I have read in Arizona's handbook about adoption assistance and it mentions SSI but not death benefits. Can someone help us or guide us to find written policy what has been told to us?

 

[Taxing Matters]

What is the name of your state (only U.S. law)? AZ

We adopted our daughter in Arizona. We receive Title IV-E adoption assistance from Arizona. Their definition of this assistance in their policy handbook is for use of "adoptive parents to assist with extra expenses involved in the care, time and supervision of a special needs child." I view this assistance as help for the parents.

However, SSA views it differently. SSA states the following about Title IV-E funds:]

Adoption assistance cash payments made to adoptive parents on behalf of a child under Title IV-E are Federally funded income based on need (IBON) to the adopted child. This income is not subject to the $20 general income exclusion and the Presumed Maximum Value (PMV) cannot be applied. Therefore, the total payment is considered cash income to the adopted child and is counted dollar for dollar.​

(Bolding added.) See https://secure.ssa.gov/poms.nsf/lnx/0500830415

So while the checks may be made out to you, they are paid to you on her behalf and, as the part I bolded indicates, they are treated as cash income of the child. The survivor benefits are also benefits for the child, and there are rules for coordination of benefits that prevent a child from cashing in on the full amount of some SSA benefit programs when the person is receiving another SSA benefit. SSI is not affected (as the above from SSA indicates), but other programs are. Arizona DCS specifically states that death (survivor) benefits are among those that are affected:

Will Adoption Subsidy subtract other benefits such as Social Security (SSA) or Supplemental Security Income (SSI)?
Adoption Subsidy subtracts some benefits such as SSA death or disability benefits. SSI is not subtracted but the adoptive parent must report the receipt of adoption subsidy maintenance to Social Security and frequently the child will no longer qualify for SSI after the adoption.​

(Bolding in original.) See page 3 of the Arizona DCS publication Adoption Subsidy found at: https://dcs.az.gov/sites/default/files/media/PAP-194english.pdf

So it appears that what DCS has told you is consistent with that publication. Since these are both programs of SSA, you may ask SSA directly how the coordination of these two benefits is supposed to work.