How Do I Keep My SSI and Inheritance Money?

Receiving an inheritance while on Supplemental Security Income can feel like a double-edged sword. The Social Security Administration considers the receipt of inheritance as triggered by someone's death—often a loved one—which is the event that can affect your SSI and other benefits, since any assets or money you receive may impact your eligibility. The good news: with the right steps, you can often protect both your SSI and your inheritance.

Quick answer: how to keep both your SSI and your inheritance

SSI is a needs based program with strict asset limits. For 2026, you cannot have more than $2,000 in countable resources as an individual or $3,000 as a couple. When you receive inheritance money, it can temporarily stop your SSI payments if your total resources exceed these limits.

Here are the four main strategies to keep your benefits:

1. Report the inheritance to the Social Security Administration within 10 days after the end of the month you received it

2. Spend down on allowed items like housing modifications, debt repayment, or a vehicle

3. Use a Special Needs Trust to hold larger amounts without affecting eligibility

4. Open an ABLE account if your disability began before age 26 (rising to age 46 starting in 2026)

Using a special needs trust or ABLE account can allow you to continue to receive SSI benefits even after inheriting assets.

Refusing or signing away your inheritance to a family member usually backfires. The Social Security Administration SSA can treat this as if you received the money anyway and impose financial penalties that can suspend your benefits for up to three years.

The rest of this article walks through each option in detail with examples and practical steps so you can make informed decisions about your financial future.

How inheritance affects SSI eligibility

Before diving into solutions, you need to understand exactly how inheritance can affect your benefits.

Inheritance affect is not limited to SSI eligibility—receiving an inheritance can also impact other government benefits such as Medicaid and food assistance programs, because these programs have strict income and resource limits.

Supplemental Security Income SSI is fundamentally different from Social Security Disability Insurance or regular Social Security benefits. While SSDI is based on your work history and prior payroll contributions, SSI is specifically designed for disabled individuals with limited income and resources. Only SSI eligibility is at risk when you receive an inheritance.

How SSA counts your inheritance

The Social Security system treats inherited money in two phases:

First, as income: In the month you receive the inheritance (or gain access to it), SSA counts it as unearned income. If this pushes your total income above the federal benefit rate, you may lose SSI for that month.

Then, as a resource: Starting the following month, any remaining inheritance becomes a countable resource. It stays on your record until you spend it or convert it to an exempt asset.

The 2026 resource limits

The SSI resource limit hasn’t changed in decades, creating ongoing tension for beneficiaries:

Going over these limits by even $1 can make you ineligible for that month.

Concrete examples

Consider these scenarios:

• Example 1: You have $500 in the bank and inherit $5,000 on June 10, 2026. Your total countable resources are now $5,500—well over the $2,000 limit. You’ll be ineligible for June and every month after until your resources drop back under $2,000.

• Example 2: You have $1,800 in savings and inherit $150. Your new total is $1,950, still under the limit. You keep your SSI.

• Example 3: You inherit $3,000 on August 15, 2026, and spend $2,500 on allowed items by August 31. If your remaining balance stays under $2,000, you may only lose one month of benefits.

Losing SSI eligibility for a month or more can also affect linked benefits like Medicaid benefits, which many SSI recipients depend on for healthcare coverage.

SSI resource limits & what actually counts

Not everything you own counts against the SSI resource limit. Understanding what’s excluded can save your benefits.

What counts as a resource

These items typically count toward your $2,000 limit:

• Cash on hand

• Money in checking and savings accounts

• Stocks, bonds, and non-retirement investments

• Additional vehicles beyond your first one

• Real estate you don’t live in (rental properties, vacant land)

• Inherited personal property you could sell for cash

What’s excluded from counting

The Social Security Administration excludes several important assets:

• Primary residence: Your home doesn’t count if you live in it—even if you inherited it in 2026 and it’s worth $300,000

• One vehicle: Fully exempt if used for transportation, regardless of fair market value

• Household goods and personal effects: Furniture, clothing, and similar items you use

• Burial funds: Up to $1,500 per person for prepaid burial expenses

• Life insurance: Policies with face values not exceeding $1,500

• Property essential for self support: Tools, equipment, or inventory actively used in a trade or business

Practical example

If your grandmother leaves you her house and you move in as your primary residence, it typically doesn’t count against your SSI. But if she leaves you a second house that you rent out, SSA will count your equity as a resource—potentially pushing you over the limit until you sell or convert it.

SSA reviews your resources at application and during periodic redeterminations. They can request:

• Bank statements covering specific months

• Property records and deeds

• Investment account statements

• Documentation of any large purchases or asset changes

Will SSI know if I get an inheritance (and do I have to report it)?

Yes, you are legally required to report an inheritance that changes your income or resources. And yes, SSI will often find out even if you don’t report it.

How SSA discovers unreported inheritance

The Social Security Administration has multiple ways to uncover inheritance you haven’t disclosed:

• Bank data matches: SSA cross-references your information with financial institutions

• State agency records: Information sharing between government programs

• Probate and court records: Wills probated in your county become public record

• IRS data: Large deposits or income changes can trigger reviews

• Tips and investigations: Sometimes from family members or case reviews

The 10-day reporting rule

SSI recipients must report an inheritance to SSA no later than 10 days after the end of the month in which they received it. Reporting sooner is always safer.

For example, if you inherit money on March 15, 2026, you must report by April 10, 2026, at the latest.

Consequences of not reporting

Failing to report an inheritance can result in:

• Overpayment demands: You must repay benefits you received while ineligible

• Benefit suspension: SSI payments stop until the situation is resolved

• Civil penalties: Fines of $25 to $100 per unreported instance

• Fraud investigations: Serious cases can lead to criminal charges

If you receive both SSI and SSDI, remember that only the SSI portion requires reporting inheritance. Social Security Disability Insurance based on your work history isn’t affected by assets or inheritance.

How to report an inheritance to SSI

Reporting correctly and promptly is your important first step in protecting both your benefits and your inheritance money.

Step-by-step reporting process

1. Gather your documents:

   • Death certificate of the person who left you the inheritance

   • Copy of the will or probate papers

   • Bank statements showing the deposit

   • Property deeds (if you inherited real estate)

   • Life insurance payout documentation

2. Contact your local Social Security office:

   • Call the national SSA line at 1-800-772-1213 to schedule an appointment

   • Visit in person if you prefer face-to-face communication

   • Bring all documentation with you

3. Submit proof of the inheritance:

   • Provide copies of all relevant documents

   • Explain when you received access to the money or property

   • Be honest about the full amount or value

4. Request written confirmation:

   • Ask for a receipt of your report

   • Request a confirmation letter showing what you reported and when

What happens after you report

SSA will treat the amount you “can use” in a month as income. Inheritance over the federal benefit rate will usually make you ineligible for that month.

If your resources stay above $2,000 (individual) or $3,000 (couple) after receiving the inheritance, your SSI payments will be suspended. Benefits can restart once your countable resources drop back under the limit.

Don’t forget other programs

When your resources change, also contact:

• Your state Medicaid office

• SNAP (food stamps) caseworker

• Housing assistance program (Section 8, public housing)

• Any county or state cash assistance programs

Each program has its own income or resource limits and reporting deadlines.

Recordkeeping tips

Keep a central file with:

• Dates of all phone calls and office visits

• Names of SSA representatives you spoke with

• Copies of everything you submitted

• Any confirmation letters or receipts

• Notes about what was discussed

Why you should not refuse or give away an inheritance to keep SSI

It might seem logical to simply decline an inheritance you can’t afford to accept. Unfortunately, this strategy almost always backfires.

The “constructive receipt” rule

Here’s how SSA sees it: if you could have received the inheritance but chose not to, they treat it as if you received it and then gave it away. The money counts against you either way.

This applies whether you:

• Formally disclaim the inheritance through probate court

• Ask the executor to give your share to someone else

• Sign over your portion to a family member

• Refuse to cash a check or take possession of property

Transfer penalties

Giving away or refusing inheritance is treated as a transfer of resources. The penalty period is calculated by dividing the transferred amount by your monthly SSI benefit.

Example: If you refuse a $30,000 inheritance to keep your $943 monthly SSI payment, SSA can impose approximately 32 months of ineligibility ($30,000 ÷ $943 ≈ 32).

The maximum penalty period can extend up to 36 months (up to three years) of SSI ineligibility.

Medicaid implications

Similar transfer-penalty rules apply to Medicaid, including long-term care coverage. Refusing an inheritance to keep SSI could also jeopardize your medical benefits when you need them most.

Real-world scenario

Maria receives SSI benefits and inherits $40,000 from her uncle in 2026. Worried about losing benefits, she tells the estate lawyer to give her share to her sister instead. SSA discovers the transfer during a routine review. Result: Maria loses SSI for nearly three years and owes repayment for benefits received after her uncle’s death.

Bottom line: It is almost always better to accept the inheritance, report it immediately, and use legal tools like trusts, ABLE accounts, or strategic spending to protect your benefits.

Legal tools to keep SSI and your inheritance

For larger inheritances, you’ll need formal planning tools to protect your SSI eligibility while preserving your assets for future needs.

The main options include:

• Special Needs Trusts (first-party, third-party, and pooled)

• ABLE accounts (Achieving a Better Life Experience)

Another estate planning tool is an irrevocable trust. With an irrevocable trust, assets are managed by a trustee, and the terms of the trust cannot be changed except under specific circumstances. Irrevocable trusts can play a role in asset protection for some families.

These tools have specific federal and state legal requirements. They must be drafted or set up correctly to protect both SSI and Medicaid benefits.

Different tools work at different times:

1. A third party SNT created by a parent or grandparent before their death

2. A first party SNT or pooled trust set up after you receive money directly

3. An ABLE account for smaller amounts or ongoing savings

These strategies work best when coordinated with experienced attorneys in SSI/Medicaid planning and, ideally, a financial advisor familiar with disability benefits.

First-party and third-party Special Needs Trusts

A Special Needs Trust is a legal arrangement where a trustee holds and manages money for a disabled person. When properly structured, the funds don’t count as the beneficiary’s SSI resources.

First-party SNTs

A first party SNT is funded with the beneficiary’s own assets—including a large inheritance you’ve already received.

Key requirements:

• Must be established before the beneficiary turns 65

• Must include a Medicaid payback provision (remaining funds reimburse the state for Medicaid costs at death)

• Must be created by a parent, grandparent, legal guardian, or court

• Cannot be established by the beneficiary themselves (though they can petition a court)

Third-party SNTs

A third party SNT is funded with someone else’s money—typically from a parent’s estate, life insurance, or retirement account.

Key features:

• Created during the grantor’s life or through a will or revocable trust

• No Medicaid payback required at the beneficiary’s death

• Remaining assets can pass to other family members

• Often the preferred choice for parents planning ahead

What the trustee can pay for

The trustee decides when and how to spend trust funds on supplemental needs not covered by SSI or Medicaid:

• Therapies and specialized medical equipment

• Education and job training

• Transportation (including vehicle purchase and maintenance)

• Recreation and vacations

• Personal care aides

• Technology and adaptive devices

• Housing-related expenses (with careful structuring)

The trust should avoid direct cash distributions to the SSI recipient, which could reduce SSI income or cause ineligibility.

Planning example

Robert is an adult on SSI. In 2025, his mother updates her will to leave $100,000 to a third-party Special Needs Trust for Robert, rather than naming him as a direct beneficiary. When she passes away, Robert continues receiving full SSI and Medicaid benefits while the trust pays for things like a modified van, computer equipment, and annual family vacations.

Special Needs Trusts must follow detailed federal law (42 U.S.C. § 1396p(d)) and comply with each state’s trust and Medicaid rules. Using a qualified attorney is crucial—mistakes can invalidate the trust’s protection.

Pooled trusts

A pooled trust is a type of Special Needs Trust managed by a nonprofit organization. Multiple beneficiaries’ funds are combined for investment purposes but kept in separate subaccounts.

When pooled trusts make sense

Pooled trusts work well when:

• The inheritance is relatively modest ($10,000–$80,000)

• There’s no suitable individual to serve as trustee

• You need to deposit funds quickly to meet SSI deadlines

• Setup costs for a custom SNT would be prohibitive

Advantages

• Often set up more quickly than a custom SNT

• Lower up-front legal costs in many cases

• Professional management by the nonprofit

• No need to find and supervise an individual trustee

Important considerations

Pooled trusts funded with your own inheritance typically must include Medicaid payback or allow the nonprofit to retain remaining funds at your death, depending on state law.

Before joining a pooled trust program, ask:

• What are the one-time and ongoing fees?

• What’s the minimum deposit (often $5,000 or more in 2026)?

• How do you request and receive distributions?

• How quickly are distribution requests processed?

• What happens to any balance at the beneficiary’s death?

Read the master trust agreement carefully before signing. Some pooled trusts have restrictions that may not fit your situation.

ABLE accounts (Achieving a Better Life Experience)

ABLE accounts are tax-advantaged savings accounts that let you save money without losing SSI—if you meet the eligibility requirements.

Eligibility requirements

To open an ABLE account, your disability must have begun:

• Before age 26 (current rule)

• Before age 46 (starting in 2026, under expanded legislation)

This change means millions more people will become eligible for ABLE accounts.

Contribution limits

ABLE account contribution limits generally track the annual gift tax exclusion:

Working ABLE account holders may contribute additional amounts above these limits under certain conditions.

How ABLE accounts affect SSI

• Up to $100,000 in an ABLE account is disregarded for SSI resource limits

• Above $100,000, SSI cash benefits may be suspended

• Medicaid eligibility typically continues even if SSI is suspended due to ABLE savings

What you can pay for

ABLE funds must be used for qualified disability expenses, which include:

• Housing costs (rent, mortgage, utilities)

• Transportation

• Education

• Employment training and support

• Assistive technology

• Basic living expenses

• Health and wellness costs

• Legal and financial services

• Oversight and monitoring expenses

Quick example

Jessica receives SSI and inherits $15,000 in March 2026. She reports the inheritance immediately and deposits the full $15,000 into her ABLE account within the same month. Her bank account stays under $2,000, and she remains within SSI resource limits. She can now use the ABLE funds for qualified disability expenses over time.

Some states allow non-residents to open ABLE accounts. If your state doesn’t have a program, you may still qualify through a nationwide option.

Spend-down strategies to get back under SSI limits

“Spending down” means using inherited money on allowed items so your remaining countable resources fall below SSI limits as quickly as reasonably possible.

The rules of spending down

Your spending must meet certain criteria:

• Purchases must be for fair market value (no sweetheart deals or fake sales)

• Money must be used for your own benefit

• You cannot give money away to family or friends

• Keep detailed records of every purchase

Effective spend-down ideas

Consider using inheritance for:

• Debt repayment: Credit cards, medical bills, personal loans, mortgage payments

• Primary residence: Down payment, repairs, accessibility modifications, or prepaid property taxes

• Transportation: Purchase one vehicle or repair your current one

• Healthcare: Dental work, vision care, hearing aids, or medical expenses not covered by Medicaid

• Prepaid expenses: Rent or utilities where allowed by SSA rules

• Essential items: Appliances, furniture, or personal property you actually need

Spend-down example

Marcus inherits $8,000 in August 2026. He has $500 in the bank, bringing his total to $8,500—well over the $2,000 SSI limit.

By the end of September 2026, he spends:

His remaining bank balance: $1,000. He’s back under the resource limit.

Documentation is critical

For every spend-down purchase, keep:

• Receipts and invoices

• Proof of payment (bank statements, canceled checks)

• Photos of items purchased or work completed

• Written agreements for any services

SSA may later ask exactly how you reduced your resources. Complete documentation protects you from overpayment claims.

Balance speed with smart decisions

Spending down too slowly can cause months of SSI ineligibility. But rushing into bad purchases, scams, or unnecessary items wastes your inheritance. Plan your spend-down carefully:

• Prioritize debts and genuinely needed items first

• Get multiple quotes for major purchases or home work

• Consult a financial advisor if the inheritance is substantial

• Consider setting aside funds for an ABLE account or trust if spending down alone won’t work

What happens if you inherit a house or other property?

Inheriting real estate creates unique challenges for SSI recipients. The rules depend on whether you’ll live in the property.

Inherited homes you live in

An inherited home used as your primary residence is usually excluded from SSI resource counting. This applies even if:

• The home is fully paid off

• It’s worth far more than $2,000

• You inherited it this year

If you receive supplemental security income and inherit a house, moving into it promptly can protect your benefits.

Inherited property you don’t live in

If you inherit property you won’t live in—like a rental house, vacation home, or vacant land—SSA will count your equity as a countable resource.

Your equity = Fair market value minus any mortgage or liens

This can push you over the resource limit immediately and keep you ineligible until you sell or convert the property.

Options for non-resident property

If you inherit a home you can’t live in:

1. Move in: Make it your primary residence within a reasonable time

2. Sell it: Use spend-down strategies, trusts, or ABLE accounts for the proceeds

3. Transfer to a Special Needs Trust: May be possible if structured correctly under state law

Comparison example

Scenario A: In 2025, you inherit your grandmother’s modest house worth $120,000. You move in immediately. It becomes your primary residence and doesn’t count against SSI. You keep benefits.

Scenario B: In 2026, you inherit a second house from an aunt. It’s worth $80,000 with no mortgage, and you already have a home. SSA counts the full $80,000 as your resource. Your SSI stops until you sell the house and properly handle the proceeds.

Additional considerations

If the inherited house has ongoing costs (mortgage, property taxes, insurance), some of your inheritance may need to cover those expenses. Also, housing-related payments from a trust or ABLE account can sometimes affect your SSI payment amount if not structured carefully.

Before selling, renting, or transferring inherited real estate, consult with experienced attorneys who understand both real estate law and SSI/Medicaid planning. The wrong choice can have different effects on your estate taxes, SSI eligibility, and long-term finances.

Protecting other benefits tied to SSI

SSI eligibility often automatically qualifies you for other programs. An inheritance can ripple through multiple benefits at once.

Programs commonly linked to SSI

• Medicaid: Healthcare coverage that often comes automatically with SSI in most states

• Housing assistance: Section 8 vouchers, public housing, or subsidized rentals

• SNAP: Food assistance (formerly food stamps)

• State cash assistance: State or county supplemental payments

• Energy assistance: LIHEAP and similar utility programs

How inheritance affects affect these programs

Many of these programs have asset and income limits similar to or linked with SSI. Going over SSI limits can trigger:

• Reviews or redeterminations for other programs

• Temporary suspension of benefits

• Loss of eligibility until resources drop

What to do

When your resources change due to receiving an inheritance:

1. Notify each agency that administers your benefits

2. Ask specifically how a temporary SSI suspension will affect your eligibility with them

3. Provide the same documentation you gave to SSA

4. Keep copies of all correspondence

Unified protection

Special Needs Trusts and ABLE accounts, when used correctly, can help you stay within the rules of multiple programs at once—not just SSI. A properly structured trust protects both your SSI income and your Medicaid benefits simultaneously.

Keep one central folder (physical or digital) containing:

• All benefit notices from every program

• Trust documents and amendments

• ABLE account statements

• SSA letters and confirmations

• Representative payee reports (if applicable)

This makes managing multiple programs much easier and helps ensure compliance across all your benefits.

When and how to get professional help

Inheritance plus SSI involves overlapping federal and state laws. Mistakes made in 2025–2026 can have financial effects for years. Professional guidance is often worth the investment.

Who can help

Disability or elder-law attorneys who handle:

• SSI and Medicaid planning

• Special Needs Trust drafting

• ABLE account coordination

• Estate planning for families with disabled members

Financial planners experienced with:

• Government benefits and asset limits

• Trust administration

• Long-term financial planning for people with disabilities

Tax professionals for:

• Income tax implications of inheritance

• Capital gains on inherited property

• Estate taxes (for larger inheritances)

Choosing an attorney

When interviewing a law firm or solo practitioner:

• Ask about their specific experience with SSI and Medicaid planning

• Inquire how many Special Needs Trusts they’ve drafted in the last year

• Request an estimate of fees upfront

• Ask about ongoing support after initial setup

Professional SNT setup typically costs $2,000–$5,000 initially, plus potential annual trustee fees.

Preparing for your consultation

Gather these documents before meeting with any professional:

• Recent SSI notices and benefit statements

• Bank statements from the past 3–6 months

• Inheritance documents (will, trust, life insurance policy, probate papers)

• List of your current monthly expenses

• Documentation of any debts

Finding affordable help

If cost is a barrier, explore:

• Legal aid organizations in your area

• Disability rights groups and advocacy organizations

• State bar referral services with sliding-scale fees

• Law school clinics focusing on elder law or disability rights

Many of these resources specifically help low-income SSI recipients navigate complex benefit issues.

A reassuring reality

With prompt reporting, smart use of trusts or ABLE accounts, and the right advice, it is often possible to keep both your SSI benefits and the long-term value of your inheritance. The key is acting quickly and using the right tools for your situation.

The first step is always the same: report your inheritance within 10 days and start planning immediately. From there, you can work with professionals to protect your benefits, your inheritance, and your life experience as a person with a disability.