How Do Inheritances Impact Disability Benefits?

Some benefits programs have income and resource limits. Income is money you get. This could be from a job; cash gifts from family or friends, including inheritances; or money from other benefits. Money counts as income in the month that you receive it. Resources are things you own like a house, car, or bank account. Money that stays in your bank account the month after you receive it counts as a resource.

Inheritances and SSDI

If you receive Social Security Disability Insurance (SSDI), receiving an inheritance will not impact your benefit. SSDI does not have a resource limit and unearned income, like from an inheritance, does not impact your benefit. You don’t need to do anything!

Inheritances and SSI

If you receive Supplemental Security Income (SSI), you have a $2,000 resource limit. An inheritance counts as unearned income and will impact your SSI.

When you receive an inheritance, you have two options if you don’t plan to spend it all immediately and want to minimize its impact on your SSI and Medicaid. You can put it in an ABLE account or a Special Needs Trust (you can also do both!).

ABLE accounts are tax-advantaged savings accounts for people with disabilities that began before age 26. Money in an ABLE account doesn’t count as a resource for SSI or Medicaid. ABLE accounts have annual contribution limits. In 2025, you can put up to $19,000 in your ABLE account. If your inheritance is more than $19,000, you’ll need to place the remaining amount in a Special Needs Trust. Special Needs Trusts are managed by a trustee and do not have a contribution limit. You can set up a private Special Needs Trust with the help of an attorney or join a pooled Special Needs Trust run by a nonprofit agency. Money in a Special Needs Trust doesn’t count as a resource for SSI or Medicaid.

Your inheritance will count as income the month you receive it. You’ll need to report this income to Social Security and you won’t be eligible for your SSI check that month. Make sure to move the money into an ABLE account or Special Needs Trust right away so it doesn’t count as a resource and you can be eligible for SSI again next month.

Planning an Inheritance for a Person with a Disability

If you’re a family member of a person with a disability and you want to plan for an inheritance for your loved one, it’s a good idea to talk with a Certified Benefits Planner or an estate planning attorney to make a plan to give the inheritance without impacting their benefits. A Certified Benefits Planner at Northwest Access Fund can help!