How can I avoid life insurance money affecting my brother’s SSI?

UPDATED: Oct 14, 2020

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UPDATED: Oct 14, 2020Fact Checked

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Our grandfather recently past away and he had a life insurance policy from a past job on my brother and I. Split two ways it came out to $6,500.00 each. The check was written out to my brother. I am his POA. I am worried that if I deposit the check that he will lose all of his SSI, medicaid and medicare. Is there anything I can do so that the money will come to me and not affect his SSI and benefits?”

Asked June 21, 2017

1 Answer

The general rule is that any income can affect SSI and Medicaid (though generally not Medicare) benefits because these benefits are awarded solely on the basis of financial feed. You may not have more than $2,000 in assets before your eligibility will be affected. Consequently, any income, whether earned or unearned, can adversely affect benefits.

If your brother is physically or mentally disabled, you have the option of cashing the check in his name and subsequently setting up a Special Needs Trust for him. Under this arrangement, the money will be held in the trust on his behalf and cannot be used for any other purpose. The trust will have its own federal ID and will not be tied to your brother’s social security number. Being that these issues are extremely complex, it is highly recommended that you speak to a qualified CPA with experience in this area or an estate attorney, to help you form this trust and establish yourself as the trustee.

Answered June 24, 2017 by bluemarlin08

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