Inheriting a House on SSI

Video

Good morning. It’s Andy Stautz at Stautz Law. Today we’re back for another talk on estate planning topics. Today’s talk is very niche, OK? What we’re talking about is giving a house or receiving a house to someone who’s on benefits.  

I’m specifically talking about SSI, but this applies to some others as well.

… As you know, those programs are means tested. Well, not all of them, but the the programs we’re talking about are means tested benefits programs. That means you can’t have. Uh. Too much property, otherwise you’ll be disqualified and the government will say, you know, no, it’s on you to pay for your care or whatever the case may be. 

So. 

Can I Inherit a House and Keep My Benefits?

Then the question is, well, what about giving an inheritance to that person, especially a house? So a common scenario is you’ve got two family members who are living together and one of them owns the house and the other one’s on benefits and wants to keep living in the house. After the first one passes.  

The Right Way to Preserve Benefits: Special Needs Trusts

You know that could be parent-child that could be, you know, two spouses; that could be siblings, whatever. The correct way to do this, the best way to do this is with a third party special needs trust. Or in some sense in some cases, uh, an irrevocable asset protection trust. You know, because that way you just you keep it out of the… you keep it out of the estate, you keep it out of the countable assets. That like, that’s the textbook way to do it. 

 OK, the problem is those trusts and those planning techniques are more expensive and more complicated, kind of, to understand and to implement. So some people don’t want to do that. Either they can’t afford the few thousand dollars it’s going to be to set it up, or they don’t trust it or, whatever the case may be.  

The Quick-and-Dirty Way: Excluded Assets

So the hack we’re going to talk about today and it really is a hack, I don’t, you know… far from recommending this universally…  

But a key point to remember is that a house is… A house in which the benefits recipient lives… is an excluded asset under SSI rules. And I’ll try to put a citation in the text version of this.  [Citation to SSA Handbook Here!]

So in theory you can pass a house to an SSI beneficiary without triggering any problems for them in terms of immediate spend down or other needs. That only applies if it’s already that person’s primary residence, so you know kind of the situation where two people are living together.  

Risks and Considerations to Giving a House to SSI Benefits Recipient

And it’s risky, right? Because who knows what’s going to change in the circumstances between when you come up with that simplified plan and, you know, the death and actual transfer of assets 

But it is kind of … it’s kind of one thing to keep in mind is. OK, you can pass some assets. To someone on benefits, you can do it as long as they’re excluded, non countable, you know. Whatever.  

So again, the textbook way to do this is with a special needs trust. That way you’re keeping it totally out. You know, that’s the right way to do it: keep it out of their estate. Don’t make it count as their property. 

But you could pass excluded assets and they’d still be excluded, that works. That’s the idea. That’s the idea.  

How to Give Your House to SSI Recipient

So obviously this is very case by case determination, but it’s a… it’s a situation that comes up occasionally. UM. I almost hesitate to talk about it because I I don’t want people out there running and say “ohh. I’ve got this. This is going to work,” you know, but it’s a possibility.  

And one thing I talk about with my clients is what level of complexity and cost they want. Right, because sometimes you want the Cadillac plan. Other times you want something. That’s just. Like. That’s something, something simple.  

So if you come into a planning meeting with me, we’ll talk about that. We’ll discuss your situation. You’ll get actual advice rather than just a general discussion like this. So I look forward to talking to you about that. You can book a planning meeting online. The link to follow. Or you can give me a call and I look forward to working with you soon.  

Thanks! Bye.