How does Supplemental Security Income fit into estate planning?
UPDATED: February 6, 2012
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Supplemental Security Income (SSI) is a government aid program used to offer support to elderly, blind, or disabled people. The program is available for U.S. or Northern Mariana Islands citizens and is designed to provide money for basic needs including food, clothing, and shelter. Supplemental Security Income can be used to supply elderly people with income when their other assets have been spent.
Supplemental Security Income Requirements
In order for an elderly person to receive SSI, he or she must be 65 years or older, and must be making no more than $3,000 per calendar year or $65 per month from any form of income including payments from trusts or wages. Additionally, any assets that can be liquidated such as real estate, life insurance policies worth more than $1,500, and some cars, are calculated into the total value of the estate. Supplemental Security Income must be applied for and approved by the government. Approval will not be affected by other government aid such as Social Security, Medicare, or food stamps. Although cases can be appealed, there is no guarantee that government funds will be paid to any specific individual.
The federal Supplemental Security Income program provides for an amount of $1,700 to be paid to an individual and twice as much for a married couple. Those on SSI payments can also receive food stamps, Medicare, and any other available government assistance. Supplemental Security Income payments will cease when an elderly person is placed in a state hospital or institution for care and treatment, but can resume if the person is released.
Estate Planning Techniques
The use of Social Security Income and other forms of government aid for estate planning is controversial. Some estate planning attorneys will seek government assistance only after a client’s entire estate has been utilized for his or her care. This approach is widely accepted in the legal community and not considered unethical. However, this will result in little to no inheritance for family members once the person dies.
Other members of the legal community prefer to protect a person’s assets from the extensive costs of aging and choose instead to fully utilize government assistance for the person’s care. In this case, attorneys have been known to either directly gift all of a person’s assets or place all of the assets into an irrevocable trust with payments being made to the person that are small enough for him or her to qualify for government assistance. This protects the inheritance for the person’s children, but in essence, takes unnecessary funds from the government.
If you are an elderly person or if you’re caring for an elderly person and would like more information about using Supplemental Security Income in your estate planning, contact an estate planning attorney. An attorney can help you organize your estate, following your wishes to ensure that you always have proper care in your golden years.