When discussing estate planning and beneficiaries, a number of circumstances may arise. An all too common scenario is beneficiaries (most often children) who have disabilities. These disabilities can be from birth, injuries, or just evolve from health issues. If they are unable to work, and receive Social Security Income (SSI), they are extremely limited in the assets and income they receive and still remain eligible.
Leaving an SSI recipient your assets can often disqualify them from their SSI benefits. This results in a significant hardship and they must then exhaust the inheritance before they are again eligible for the SSI benefits. Leaving assets directly to beneficiaries, through payable on death designations, or naming them as beneficiaries of life insurance policies, is an excellent way to avoid probate. Unfortunately, this can lead to SSI beneficiaries losing their benefits.
An alternative is to have your assets pass through your will or trust. It is important the document contain a provision, which allows the trustee or executor the ability to withhold payment of income and/or the transfer of assets to a beneficiary who is receiving certain benefits. This allows the beneficiary to continue to receive SSI and have the inherited assets supplement their needs.
If your documents were drafted by our law office in the last few years, we have included a provision allowing the trustee or executor the ability to distribute the assets as needed to best assist your child (or other beneficiary). The provision only allows distribution as deemed necessary and therefore the beneficiary has no absolute right to the asset preserving their ability to receive SSI.
One thing to keep in mind is that circumstances change. Often when we draft documents, or make beneficiary designations, everyone is healthy. If that changes after the ink dries, it can be an enormous problem for the beneficiary, which can be avoided with proper drafting.
If you have questions or concerns please call us or make an appointment to review your estate plan.