If you have a loved one with a disability, you may worry about how they will financially support themselves when you are no longer around to handle this yourself. And so, you assume that you are doing what’s best for them by leaving them with a majority of your estate in your estate plan. However, the specific tools you use to execute this may be pivotal for not jeopardizing their Supplemental Security Income (SSI) and Medicaid benefits. With that being said, please continue reading to learn how your estate plan may inadvertently hurt your loved one’s eligibility for government benefits programs, and how an experienced New Jersey SSDI benefits lawyer at The Law Offices of Sheryl Gandel Mazur can refer you to commonly adopted strategies under similar conditions.
Can my estate plan hurt my loved one’s government benefits?
Simply put, if you transfer your liquid funds directly to your loved one with a disability upon your unfortunate passing, you may accidentally cause them to tip over the resource limits imposed by the SSI and Medicaid benefits programs.
For 2026, this cap is set at $2,000 for an individual and $3,000 for a married couple. Generally speaking, an individual’s or couple’s primary home, one vehicle, and personal belongings may not be counted toward this total.
However, if your loved one receives a lump-sum inheritance from you, this may cause their resources to exceed the limit on the first of the month. This means that they may lose their SSI and Medicaid eligibility for that month, and possibly even receive an overpayment notice.
What estate planning strategies should I adopt to avoid this issue?
Rest assured, there are still means of providing financial support to your loved one with a disability through your estate plan without compromising their monthly SSI and Medicaid benefits payments. One common strategy you may adopt is an Achieving a Better Life Experience (ABLE) account.
Simply put, an ABLE account is a tax-advantaged savings account for individuals with disabilities that allows them to save money for qualified disability-related expenses without losing their government benefits. So, your loved one may hold up to $100,000 in this account. Then, you may gift up to $19,000 per year, or $38,000 as a married couple, without federal tax.
Say you are capable and willing to offer your loved one more than $100,000, plus other non-liquid assets, to hopefully support their needs for the rest of their lifetime. For this, we may advise you to work with an estate planning attorney, set up a special needs trust, and make your loved one the beneficiary.
Notably, anything you put in the trust will be shielded from your loved one’s countable resources. This is because the trust itself technically owns these assets, not your loved one. Plus, if you worry about your loved one’s capacity to handle assets beyond the limited funds in their ABLE account, your trust may include a responsible trustee to manage this on their behalf.
For further legal guidance, please look no further than a skilled New Jersey SSDI benefits lawyer. When you work with The Law Offices of Sheryl Gandel Mazur, you can trust that you are in good hands. Schedule a consultation with us today.
