Disability Benefits and Trusts

There is often a lot of confusion surrounding Trusts when an individual applies for disability. There are many types of Disability benefits that an individual can apply for, but only one type of disability application takes Trusts and other financial assets into account; Social Security Income (SSI). In SSI, an individual can receive an outright non-medical denial of their disability benefits if they have a trust set up in their name. It is our goal, at Mission Possible, to guide you through the process of preventing such an outright denial.

Inheritances of any kind, direct or in a trust, will often result in a denial; or if an individual is already receiving SSI benefits, it can result in an over payment, which can be very difficult to fix. SSI benefits, in this scenario, will likely be terminated. If you, or a family member, have an inheritance coming in at some point, we recommend that you contact us immediately to help prevent such a future problem from occurring.

The number one method of bypassing SSI financial asset determinations of an inheritance is achieved by establishing two things. First, the individual creating the inheritance must create or obtain a pour over will. Essentially, this will cause all of the designated assets to pour over, upon death, into a trust. Second, there are many types of trusts available for creation and pour over, but only one type of trust will bypass SSI financial asset accounting; Third Party Supplemental Needs Trusts.

This kind of trust differs from other trusts in a very significant way; the money is not directly accessible from the beneficiary for any reason. Essentially, the trustee purchases essential need items for the recipient, but money is never directly accessed by the beneficiary. This last part is very important because if directly accessed by the beneficiary, it will become a countable asset from Social Security’s perspective. Lastly, in a Third Party Supplemental Needs Trust, the beneficiary/disability recipient never directly touches the money. It is established by a third party, without the involvement of the beneficiary, but for the beneficiary’s benefit. Again, this can be a very complex process and we recommend seeking legal assistance and/or contacting us at Mission Possible to help you protect your assets, inheritance, and ensure the financial wellbeing of your loved ones.

~ Michael