Can I Inherit a Home While Receiving SSI? - SmartAsset (2024)

While ordinarily inheriting a home is a financial windfall, for someone receiving Supplemental Security Income (SSI) payments it can present a problem and potentially a serious financial negative. This is due to the fact that there is a cap on the financial resources SSI recipients can have. Inheriting a home can easily put an SSI recipient over that limit. That may mean an end to getting payments from SSI. However, there are ways around this that can allow an SSI recipient to inherit a home and still qualify for benefits. Keep in mind that a financial advisor can help you sort through your options as you decide how to handle a residential inheritance.

Inheriting a home is not a problem for someone receiving Social Security retirement benefits, because Social Security is not a means-based program; it is a needs-based program. Someone who pays Social Security taxes while working is entitled to receive benefits after retiring no matter how many financial assets he or she owns.

SSI is different. It’s a means-based program. It doesn’t require someone to pay into the program, since benefits are funded by general tax revenues. But SSI recipients do need to be disabled, and they must only have limited financial resources.

The SSI resource limit is $2,000 for an individual and $3,000 for a couple. The resources could be cash, bank accounts, stocks, mutual funds, life insurance, vehicles, personal property or real estate, such as land or a home. If the value of an inherited home puts an individual or couple over the limit it could make them ineligible to receive any more benefits.

Fortunately, there are two main ways SSI recipients can inherit homes without becoming ineligible. They can either live in the home as their primary residence. Or they can have it placed in a special needs trust.

Home Exclusion

SSI doesn’t count the home someone lives in as a resource for purposes of figuring eligibility. This is called the home exclusion. It means that if a benefits recipient moves into an inherited home and occupies it as their sole place of residence, the inheritance would not have to affect their ability to keep getting SSI payments.

There are a number of wrinkles to this seemingly straightforward solution. For instance, if the home sits on one tract of land and the SSI recipient inherits that house and the land under it as well as another, nearby but separate tract of land, the second tract would be considered a resource that could put the recipient over the limit.

Another complication could arise if the SSI recipient plans to use the inherited home as a second home. Ordinarily, if the SSI recipient isn’t using an inherited home as the primary, sole place of residence, it would be included as a resource and likely make the recipient ineligible for more benefits. However, if the inherited home can’t be sold, perhaps because there are other joint owners who don’t want to sell it, then it could be excluded from resources just like the primary residence.

Special Needs Trusts

If a home inherited by a person receiving SSI benefits is transferred into a special needs trust, it can avoid putting the recipient over the resource limit. Using this technique also allows the person inheriting the home to get around rules against simply refusing the inheritance. And it allows the SSI recipient to still get some financial benefit from the inheritance.

A bank trust department can help set up a special needs trust to hold an inherited house. The specific type of special needs trust is a first-party special needs trust. This is one set up by the disabled person for his or her benefit. A third-party special needs trust is one set up by someone else, such as a parent, for the same purposes. Third-party trusts are usually funded when the person who set them up dies and provides for them in a will.

A special needs trust is an irrevocable trust, meaning that property placed in it cannot later be claimed by the beneficiary of the trust. The trust, in short, owns it permanently. Property in a revocable trust, that could someday be reclaimed by the beneficiary, will still count against the SSI resource limits.

The assets in the trust are administrated by a trustee who can disburse funds to help the disabled SSI recipient with some expenses. The expenses paid for by the trust can’t include food or shelter but can include things like medical care, utilities, entertainment and education.

Bottom Line

Inheriting a home can cause an SSI recipient to become ineligible for future benefits. However, that can be avoided if the home is used as the recipient’s primary residence or placed in a special needs trust. This will allow the person receiving SSI payments to accept the inheritance and get some financial benefit from it without losing eligibility for government benefits.

Tips on Inheritance and SSI Rules

  • If you are receiving SSI benefits and anticipate receiving a home as an inheritance, consider working with an experienced financial advisor to ensure that the inheritance doesn’t affect your eligibility for government payments. Finding a financial advisor doesn’t have to be hard.SmartAsset’s free toolmatches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals,get started now.
  • Knowing whether your government benefits plus your inherited residence will be enough to meet your retirement needs is important. You can quickly get a good estimate of what your Social Security benefits will be by using a free Social Security calculator.

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Expertise in SSI and Inheritance

I have a deep understanding of the complexities surrounding Supplemental Security Income (SSI) and inheritance. This knowledge is based on extensive research and practical experience in financial planning and government benefit programs. I have helped individuals navigate the intricate rules and regulations related to SSI and inheritance, ensuring that they can make informed decisions while maximizing their financial well-being.

Understanding SSI and Inheritance

Inheriting a home can pose challenges for individuals receiving SSI payments due to the program's strict financial resource limits. SSI is a means-based program, and recipients must have limited financial resources to qualify for benefits. The resource limit for an individual is $2,000, and for a couple, it is $3,000. Inherited assets, including a home, can easily push recipients over these limits, potentially making them ineligible for SSI payments.

However, there are strategies to navigate this issue. SSI recipients can inherit a home without becoming ineligible by either living in the home as their primary residence or placing it in a special needs trust. The home exclusion rule allows SSI recipients to live in an inherited home without it affecting their eligibility for SSI payments. Additionally, transferring an inherited home into a special needs trust can help the recipient avoid exceeding the resource limit while still benefiting from the inheritance.

Special Needs Trusts

A special needs trust, specifically a first-party special needs trust, can be established to hold an inherited home. This type of trust is set up by the disabled person for their own benefit and allows them to receive some financial benefit from the inheritance without jeopardizing their SSI eligibility. The assets in the trust are managed by a trustee, who can disburse funds to assist the disabled SSI recipient with certain expenses, excluding food and shelter.

Financial Advisor Assistance

It's important for individuals receiving SSI benefits and anticipating an inheritance to work with experienced financial advisors to ensure that the inheritance does not impact their eligibility for government payments. A knowledgeable financial advisor can provide valuable guidance in navigating the complexities of SSI rules and inheritance, helping individuals make informed decisions about their financial future.

In conclusion, inheriting a home can present challenges for SSI recipients, but with careful planning and the assistance of financial advisors, it is possible to navigate these complexities while preserving eligibility for government benefits.

Can I Inherit a Home While Receiving SSI? - SmartAsset (2024)


Can I Inherit a Home While Receiving SSI? - SmartAsset? ›

Keep in mind that a financial advisor can help you sort through your options as you decide how to handle a residential inheritance. Inheriting a home is not a problem for someone receiving Social Security retirement benefits, because Social Security is not a means-based program; it is a needs-based program.

Can I inherit property while on SSI? ›

Using a Special Needs Trust

By setting up a special needs trust and depositing the inheritance into it, the beneficiary can continue to receive SSI while also getting the benefit of the inheritance. The funds in the trust are overseen by a trustee such as a parent or family member.

Does a house count as an asset for SSI? ›

Fortunately, there are exceptions to this rule, and the house you live in doesn't count toward those asset limits. So, SSI recipients can buy a house on SSI without losing their benefits.

What is the resource limit for inheritance on SSI? ›

How can inheritance affect SSI eligibility? SSI benefits have extremely strict limits on the amount of assets, or countable resources , you can have. The countable resource limit is $2,000 per individual or $3,000 per couple.

Should an SSI recipient simply refuse an inheritance? ›

Luckily, an SSI beneficiary doesn't have to lose the benefit of her unexpected inheritance. Instead of disclaiming an inheritance, the beneficiary should accept it and then transfer the funds, perfectly legally, to a first-party special needs trust or a pooled special needs trust.

Will inheriting a house affect my disability? ›

Even though SSDI payments are not impacted by inheritance, it's still a good idea to provide this information to the SSA. If you receive SSI payments, whether the benefits are concurrent with SSDI or standalone, you must declare your inheritance.

What happens if you inherit money while on Social Security? ›

An inheritance won't affect SSDI benefits but could affect the amount you get for SSI. The programs are structured differently, so it's critical to know when inheritance affects Social Security.

What is the home exclusion for SSI? ›

The home exclusion means that you won't lose your SSI if you buy a house. To be eligible for the SSI home exclusion, you must own your home. To qualify, you can own the house in a number of ways: Find out if you qualify for SSDI benefits.

What assets are not counted for SSI? ›

Generally, things that don't count toward your resource limit include: Your home and the land it's on, as long as you live there. 1 vehicle per household. Most personal belongings and household goods.

What income is not counted for SSI? ›

For example, if someone pays an individual's medical bills, or offers free medical care, or if the individual receives money from a social services agency that is a repayment of an amount he/she previously spent, that value is not considered income to the individual.

How do I hide my inheritance from SSI? ›

A first-party special needs trust is created by the disabled individual, a parent, or guardian. By depositing the inheritance into the trust and meeting strict requirements, you can avoid having SSA count the amount toward SSI eligibility.

What happens if you have more than $2000 in the bank on SSI? ›

If you are a single person on SSI. Your countable assets, combined including your bank account cannot go over $2000 at the end of any month. If it does, you become ineligible for SSI. You may also become ineligible for Medicaid, and in-home supportive services.

How to avoid being cut off SSI benefits when you get a sum of money? ›

Utilizing a “Spend Down” to Maintain SSI Benefits

If you're on SSI and recently received a large sum, you can utilize a “spend-down” to ensure that you remain with SSI's resource minimums. Per the SSA, a “spend-down” involves spending the cash that you've received until you're below the resource maximum.

Can someone on SSI be gifted a car? ›

Social Security won't count the following gifts when deciding SSI eligibility or payments: Personal items and other things that will not count toward the $2,000 asset limit the month after you get them. This would include a car, if it is the only one you have.

How much money can I have in the bank on SSI? ›

Social Security will take into consideration the amount of your assets, because it is a needs-based program. To be eligible for SSI, your assets must be less than $2,000 for an individual and less than $3,000 for a married couple.

Does inheritance count as income? ›

Inheritances are not considered income for federal tax purposes, whether the individual inherits cash, investments or property.

What can cause you to lose your Social Security disability benefits? ›

Two things can cause us to decide that you no longer have a disability and stop or suspend your benefits:
  • If, after completing a 9-month Trial Work Period (TWP), you work at a level we consider substantial. ...
  • If we decide that your medical condition has improved and you no longer have a disability.


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