Most people think of an estate plan as just preparing a will and designating where your assets go upon your death. Broader than that, estate planning is actually the process of taking inventory of your assets and determining how to dispose of them for the remainder of your life as well as upon your death. This blog is the third in a series of five blogs discussing five basic types of elder benefits in West Virginia. The first two blogs covered employee retirement benefits and Social Security retirement benefits. This blog turns to why you should discuss Social Security disability benefits with your West Virginia estate planning lawyer.
Address Social Security Disability Benefits with Your Estate Planning Attorney for a Comprehensive Estate Plan
A comprehensive estate plan takes into account your assets, your intended standard of living, and your life expectancy. In the best case scenario, you work to retirement age and then retire with enough assets to meet your needs and maintain a comfortable standard of living. But what if you become chronically ill or injured before or after retirement? The related expenses could throw a wrench in your estate plan, but you could be eligible for Social Security disability benefits to help fill the gap.
What Are Social Security Disability Benefits?
As the name implies, Social Security disability benefits are benefit programs administered by the Social Security Administration. The programs provide benefits to those who have a disability and satisfy certain medical criteria.
There are two types of Social Security disability benefits:
Each program targets a different demographic.
Social Security Disability Insurance (SSDI) provides disability benefits to workers and their families. Eligibility is based on the length of the work history and the payment of Social Security taxes (FICA). If a worker is approved for SSDI, the worker and certain family members may be eligible for benefits.
In addition to meeting the work history and Social Security tax requirements, a worker applying for SSDI must be disabled as defined by the Social Security Administration. For adults, “disability” is defined as follows: “inability to engage in any substantial gainful activity (SGA) by reason of any medically determinable physical or mental impairment(s) which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.”
Only those with a long-term, permanent disability are eligible for SSDI. Additionally, your earned income must be below a certain threshold, but there is no limit on unearned or passive income.
Supplemental Security Income (SSI) is a benefit based strictly on disability status and financial need. It is not funded by the Social Security Administration but, rather, by general tax revenues. Its purpose is to meet the basic needs for food, clothing, and shelter of the aged, the blind, and the disabled. There are no work history requirements for SSI eligibility.
Who Can Receive Government Disability Benefits?
SSDI is available for workers and some of their family members. Specifically, once a worker starts receiving SSDI, certain of the worker’s family members may also be eligible to receive benefits:
Disabled children; and/or
Adult children disabled before age 22.
Each qualifying family member may be entitled to benefits up to one-half of the worker’s SSDI benefit, although the total benefits are capped per family.
SSI, on the other hand, is available only for individuals who meet the financial criteria and satisfy any one of the following categories:
They are age 65 or older.
They are blind.
They meet the definition of “disability.”
The definition of “disability” for SSI is the same as for SSDI with one exception: minors applying for SSI need show only a “medically determinable physical or mental impairment or combination of impairments that causes marked and severe functional limitations and that can be expected to cause death” or that has lasted at least 12 months.
How to Coordinate Social Security Disability Benefits with Your Estate Planning Attorney
Individuals who wish to apply for SSDI or SSI or who are already receiving such benefits need to coordinate those benefits with their wider estate plan. Talking to an estate planning attorney about Social Security Disability Insurance as part of your estate plan accomplishes that goal.
Whether you have significant assets or not, the Social Security disability rules apply, but they are many and complicated. SSDI benefits can stop in certain circumstances such as upon your return to employment, reaching retirement age, or becoming incarcerated or institutionalized. Family benefits can also stop if the recipient marries, turns a certain age, or experiences a change in living arrangements. And for the need-based SSI, it’s all too easy to run afoul of the earned income maximum threshold.
For those reasons, discussing Social Security disability benefits with your estate planning attorney is critical. An estate planning attorney can guide you in applying for Social Security disability benefits, how to remain eligible for benefits, and how to coordinate those benefits with those in your greater estate plan.
Are you considering applying for SSDI or SSI, or do you have questions about how those benefits fit in your estate plan? Don’t start the process without first discussing Social Security disability benefits with your estate planning attorney. Anna M. Price of Jenkins Fenstermaker, PLLC, an experienced West Virginia estate planning lawyer, can help you navigate the Social Security Administration’s maze. Call Anna toll-free at 866.617.4736 or by completing the firm’s online contact form for help in WV, Ohio (OH), or Kentucky (KY).