How Do Monetary Gifts Impact Special Needs Benefits?

September 19, 2018

Accidentally hurting someone feels bad, especially when you are trying to help. Unfortunately, friends and family can inadvertently harm a special needs person by giving them a monetary gift. How can this be? Because government program eligibility is easy to lose.

Government Programs & Monetary Restrictions

Government programs like Social Security Income (SSI) and Medicaid demand beneficiaries meet certain monetary restrictions to remain eligible for benefits. In fact, the SSI program requires a candidate to have less than $2,000 worth of “countable resources” to stay in the program.

The SSI program recognizes the following assets as “countable resources” toward the $2,000 limit:

- Cash
- Bank accounts
- Assets in a revocable trust
- Land
- Life insurance
- Personal property
- Vehicles (in excess of one vehicle that transports the beneficiary or a family member of the beneficiary)
- Deemed resources (a portion of the resources of a spouse or parent of the beneficiary)

Estate Planning Attorneys & Gifts

$2,000 is a low threshold for benefit eligibility, and one gift can ruin a loved one’s benefits. Fortunately, someone can give a gift to a special needs person without affecting his or her benefits.

The following accounts/processes can be used to work around benefit eligibility:

- Special needs trusts
- ABLE Accounts

As the grantor (the person that funds the trust), you can create a special needs trust for your loved one, allowing you to transfer money to their trust account without affecting his or her benefit eligibility. If your loved one has an ABLE account, you can deposit money into their account without affecting his or her benefit eligibility.

However, both options have their pros and cons and can be challenging to set up on your own, so you should seek out an experienced estate planning attorney to walk you through the process.

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