How to Keep Your Benefits While Receiving an Inheritance
Introduction: Will an Inheritance Impact Your Disability Benefits?
If you receive Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI), you may be wondering:
💰 Will inheriting money affect my SSI or SSDI benefits?
💰 Could I lose my disability benefits if I receive an inheritance?
💰 Are there ways to protect my benefits if I inherit cash or property?
The short answer:
✔ SSI recipients risk losing benefits if their inheritance puts them over the $2,000 asset limit.
✔ SSDI recipients are NOT affected by inheritance because SSDI has no asset limits.
The good news? There are legal ways to keep an inheritance while protecting your SSI benefits—such as Special Needs Trusts and ABLE accounts.
In this guide, we’ll cover:
✅ How an inheritance affects SSI vs. SSDI
✅ How to keep your SSI benefits while inheriting money
✅ What to do if you inherit property or assets
✅ How to report an inheritance to SSA
✅ How Purple helps you track your finances and avoid benefit loss
Let’s break it all down!
How Does an Inheritance Affect SSI vs. SSDI?
✔ SSDI Recipients – No Impact
SSDI is based on your work history, not financial need.
There are no asset or resource limits, so inheriting money does NOT affect SSDI eligibility.
You do not need to report an inheritance to SSA if you only receive SSDI.
💡 However, an inheritance may affect Medicaid or other need-based benefits you receive.
⚠️ SSI Recipients – Risk of Benefit Loss
SSI is a need-based program with strict financial limits.
Inheriting money or property could put you over the $2,000 resource limit ($3,000 for couples).
If your assets exceed the limit, SSA may suspend or terminate your SSI benefits.
💡 But don’t worry—there are ways to keep your inheritance AND your SSI benefits!
How to Keep Your SSI Benefits While Inheriting Money
If you inherit money while on SSI, you must act quickly to protect your benefits. Here are three legal strategies:
1. Spend Down the Inheritance Before the Next Month
SSA checks your bank balance at the start of each month. If you receive an inheritance, you may be able to spend it on exempt expenses before SSA reviews your resources.
✅ Acceptable "spend down" purchases:
✔ Rent, mortgage, and utilities
✔ Medical bills and health expenses
✔ A vehicle (if you don’t own more than one)
✔ Home improvements (roof repairs, wheelchair ramps, etc.)
💡 This strategy works best for small inheritances. Large sums may require a trust.
2. Transfer the Funds into a Special Needs Trust (SNT)
A Special Needs Trust (SNT) allows a person with a disability to hold assets without losing SSI benefits.
✔ The money is managed by a trustee (not the SSI recipient).
✔ The funds can be used for housing, education, medical care, and other needs.
✔ The inheritance does NOT count toward SSI’s $2,000 limit.
💡 A lawyer must set up an SNT, and some trusts require Medicaid payback after the recipient’s death.
3. Deposit the Money into an ABLE Account
An ABLE (Achieving a Better Life Experience) account allows disabled individuals to save up to $100,000 without affecting SSI benefits.
✔ You must have become disabled before age 26 to qualify.
✔ The funds can be used for housing, healthcare, education, and daily expenses.
✔ SSA does NOT count ABLE account funds toward SSI limits.
💡 ABLE accounts are an excellent option for SSI recipients who inherit moderate sums.
What Happens If You Inherit Property While on SSI?
If you inherit a house, land, or other property, SSA may count it as a resource, potentially affecting your SSI benefits.
When Does Property Count Toward the $2,000 Limit?
✔ If the inherited home is your primary residence, it does NOT count against SSI.
✔ If the property is an extra house, land, or rental unit, SSA will count it as an asset, which could make you ineligible.
What Can You Do If You Inherit Property on SSI?
✔ Sell the property quickly and spend down the funds before SSA’s next resource check.
✔ Put the property into a Special Needs Trust (if allowed by state law).
✔ Move into the home if you don’t already own one, so it becomes your primary residence.
💡 If you plan to keep an inherited home, consult a disability attorney to protect your SSI eligibility.
How to Report an Inheritance to SSA
If you receive an inheritance while on SSI, you must report it to SSA within 10 days of receiving it.
Ways to Report an Inheritance:
📲 Online: Log into your my Social Security account at SSA.gov
📞 By Phone: Call SSA at 1-800-772-1213
📬 By Mail: Send a letter to your local SSA office
🏢 In Person: Visit your nearest Social Security office
💡 Failing to report an inheritance can lead to overpayments and penalties.
What If I Already Lost My SSI Due to an Inheritance?
If SSA stopped your SSI benefits because you inherited money, you can:
✔ Spend down the money to bring your assets below $2,000, then reapply.
✔ Move the inheritance into a Special Needs Trust or ABLE account.
✔ Appeal SSA’s decision if you believe there was a mistake.
💡 SSA will not restart SSI automatically—you must reapply once your resources are back under the limit.
How Purple Helps Manage Your Benefits & Inheritance
💜 Track Your Bank Balance – Ensure your SSI resources stay under $2,000.
💜 Monitor Your SSI & SSDI Payments – Get alerts when your disability checks arrive.
💜 Plan Your Spend-Down Strategy – Avoid losing SSI by tracking expenses.
💜 Find Financial Assistance – Learn about ABLE accounts, trusts, and other ways to keep your benefits.
💡 With Purple, you can manage your finances while keeping your SSI or SSDI benefits secure!
FAQs About Inheriting Money While on Disability
Will SSDI Stop If I Inherit Money?
No. SSDI has no asset limits, so inheritance does NOT affect your benefits.
Can I Inherit Money and Keep My SSI?
Yes, if you spend down the funds, put them in an ABLE account, or transfer them into a Special Needs Trust.
Do I Have to Report an Inheritance to SSA?
Yes, SSI recipients must report all financial changes within 10 days. SSDI recipients do NOT need to report an inheritance.
Conclusion: Protect Your Benefits While Receiving an Inheritance
✅ SSI recipients must stay under the $2,000 asset limit—but options like ABLE accounts & SNTs can help.
✅ SSDI recipients can inherit money without losing benefits.
✅ Failing to report an inheritance could result in SSI overpayments or loss of benefits.
✅ Use Purple to track your SSI balance & avoid eligibility issues.
💜 Sign Up for Purple to Manage Your Disability Benefits Easily!