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Question:

My friend is disabled and has $50K coming to her from the sale of deceased intestate mother’s house and maybe $75K more when she is evicted by her mother’s heirs from her present home which was also owned by her mother. She, the daughter, is age 66 and therefore it is too late for her to establish first-party supplemental needs trust to avoid losing her SSI. If she has to give up SSI in order to have access to the money, will it be easy or difficult to get SSI back when her money is gone?

Response:

Your friend’s situation serves as one more argument for people doing estate planning, since if the mother had set up a trust for the daughter the funds could be protected. But what the federal government taketh away, it also giveth. While your friend can no longer freely transfer funds to a (d)(4)(A) trust because she is over age 65, she is now old enough to qualify for Supplemental Security Income (SSI) as an “elderly” person and no longer has to establish her disability. Thus, if she spends down her funds, she can more easily reapply for SSI.

What may be more important for your friend could be the loss of her Medicaid coverage, though at age 66 she should also have Medicare. Medicaid comes automatically with SSI. Your friend may need to reapply for Medicaid directly for coverage during the gap in SSI. The eligibility rules for Medicaid can vary from state to state. Some states have no transfer penalty for people living in the community as opposed to in a nursing home. And some states permit post-65 transfers to pooled disability or (d)(4)(C) trusts, if not to (d)(4)(A) trusts.

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