Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: My client is collecting social security disability benefits and just received a big inheritance.  Are her benefits at risk?

Answer: If the client is received social security disability benefits, the benefits are not at risk.  Those benefits are based on the client’s status as an “insured” under the social security program. An “insured” is generally a taxpayer who has 40 quarters of social security wage credits.

On the other hand, the Social Security Administration oversees another disability income program known as supplemental security income (SSI).  That program is needs-based.  A person receiving SSI benefits would be in danger of having those benefits terminated in the event the participant receives an inheritance.

When working with clients who have a family member collecting SSI, or other needs-based government benefits, it is important to make plans to control the amount that the benefits recipient receives.  In many cases, the use of a special needs trust may be considered.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.