Page 14 - Demo

Supplemental Security Income (SSI)is a Social Security program that providesmonthly payments for food and shelter needsto U.S. citizens or %u201clawfully present%u201d personswho are over 65, blind or disabled, who arenot residents of an institution, and whoseassets and income are low enough to meet a%u201cmeans test.%u201d It is not necessary that a personhave worked or paid Social Security taxes tobe eligible for SSI. An SSI recipient may haveonly limited %u201ccountable income%u201d (maximum$994 for individual, $1,491 for couple)(2026) and limited %u201ccountable resources%u201d(maximum $2,000 for individual, $3,000 forcouple).In Social Security and Medicaid lawsand policies, the term %u201cresource%u201d refers tosomething you own (a house, car, bank orinvestment account, land), %u201cincome%u201d refers tosomething received during a calendar monththat can be used or liquidated to buy food orshelter, and %u201cassets%u201d includes both resourcesand income. The SSI program is intendedto provide a minimal level of assistance andBecause of the resourcelimits for Disabled ChildLiving at Home Medicaidand SSI coverage, lawyersmust be careful in craftingestate distributions,litigation, or probatesettlements.pays a maximum monthly payment of $994.Countable income of $994 or more in a monthwill disqualify the recipient for SSI benefitsfor that month. (Eligibility is redeterminedeach calendar month.) All unearned income(such as alimony, gifts, trust disbursements,interest, dividends, Social Security/RailroadRetirement payments, veteran%u2019s benefits, rentpayments) is countable and will reduce themonthly payment dollar for dollar. Only twothirds (2/3) of child support payments froman absent parent are countable income to thechild. For earned income, the first $85 andone-half of the remaining earned incomeare not counted (as well as certain disabilityrelated expenses necessary for employment,called %u201cImpairment Related Work Expenses%u201dor IRWE). Therefore, a disabled personwith only earned income of $2,053 ($2,053- $85 = $1,968; $1,968 %u00f7 2 = $984; $994 -$984 = $10) may be eligible for ten dollarsof SSI payment each month (and automaticMedicaid insurance), but a person withunearned income of $994 or more will notbe eligible for any SSI. Also, the countableresources limit is $2,000 for an individual and$3,000 for a couple.Certain assets are not counted (includingthe home, one automobile, householdcontents, burial spaces, life insurance up to$1,500, and assets held in certain %u201cspecialneeds%u201d trusts). Assets held by a guardian orconservator are considered countable resourcesof the ward.The SSI benefit will be decreased bythe individual%u2019s countable income until theSSI benefit becomes $0 at the maximum SSIpayment level for the individual%u2019s category.Money received in a particular month isconsidered income for that month.If the samemoney is retained in the following month, itbecomes a resource subject to the countableresource limit. Income of an ineligible parent(for children under 18) or ineligible spouseliving in the same household is %u201cdeemed%u201davailable, after certain deductions, to theeligible individual for SSI eligibility purposes.For this reason, most children in householdswith modest or greater income or savingswill not be eligible for SSI until they reachage 18, when deeming stops.Solution: Third party special needstrustBecause of the resource limits forDisabled Child Living at Home Medicaid andSSI coverage, estate planners and trial lawyersmust be careful in crafting estate distributionsor litigation or probate settlements to minorsor adults with disabilities. Parents, as part oftheir estate planning, should create a %u201cthirdparty special needs trust%u201d for the benefit ofthe child or grandchild and provide that anydistribution from the estate will go into thattrust. The trust should appoint the parents orother reliable trustees and successor trusteesand give the trustee sole discretion overprincipal and income disbursements.The trust should include a %u201cspendthriftclause%u201d prohibiting assignment orincumbrance of trust assets by the beneficiary.Trusts with these attributes will not becounted by the Social Security Administrationor Medicaid as the beneficiary%u2019s assets since thebeneficiary does not own or control the trust.Such a trust may be established in the parent%u2019slast will and testament (a testamentary trust)14 WINTER 2026