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When you have a loved one who is receiving disability benefits, you know how important it is that nothing occurs to interrupt or stop the benefits they need. As a result, you may be concerned about the potential impact of an inheritance on their benefits. Some types of benefits can be lost when an inheritance is received, while others are not impacted. If your loved one receives the kind of benefits that could be jeopardized by additional income or assets, then their inheritance will almost certainly be quickly consumed to replace the lost compensation or medical care they were receiving. Fortunately, your estate plan can be structured to minimize the impact on these types of beneficiaries.

Generally, a person receiving disability compensation benefits has an impairment that makes it difficult for them to earn as much as they did prior to or without their injury or medical condition. The disability compensation is partially intended to make up for the income lost (or which cannot be earned) because of the impairment. Some programs can also provide assistance with long-term care and housing needs.

Veteran in a wheelchair

There are two different types of disability compensation programs: impairment-based and needs-based. For impairment-based programs, the qualifications are medical, and income and assets are not considered. Needs-based programs have both medical and financial qualifications. Only if your intended beneficiary is receiving needs-based benefits are additional planning steps required. The most common needs-based programs are Supplemental Security Income and Medicaid.

In addition to knowing whether their benefits are impairment-based or needs-based, it’s also critical to determine whether your family member or friend is receiving veterans benefits. Qualified veterans can receive benefits from a number of programs (both needs-based and impairment-based) provided by the U.S. Department of Veterans Affairs. The medical and financial qualifications for veterans programs are different from those available to non-veterans.

Graphic of our Estate Planning When Beneficiaries Recieve Disability Benefits booklet
To learn more about planning for beneficiaries recieving disability benefits, request your free copy of "Estate Planning When Beneficiaries Receive Disability Benefits" today.

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