How Does Social Security Affect Estate Planning?

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The Social Security Administration (SSA) governs benefits provided to elderly or disabled individuals. The benefits received through Social Security can have an impact on your estate, so it’s important to account for that when creating your estate plan.

What Social Security Can Cover

Exactly what is covered by Social Security depends on the type of benefits you receive. Some of the uses for Social Security include:

  • Supplemental income (SSI)
  • Disability benefits (SSDI)
  • Retirement income
  • Survivor benefits

These may factor into your estate plan, such as if you are disabled and can no longer work, or if you need some additional income for your loved ones when you pass away.

Qualifying for Social Security Benefits

Social Security has specific requirements that vary based on the type of benefits you opt to receive.

Social Security Retirement Benefits

Retirement benefits require you to have earned a certain amount per year for at least ten years. You also need to be of retirement age (67 if you were born after the year 1960) to receive full benefits. Spousal and survivor benefits may also be available to individuals who are related to those who qualify for benefits.

Social Security Disability Insurance

Eligibility for Social Security Disability Insurance (SSDI) is based on your work history and whether you have a qualifying disability.

Supplemental Security Income

Supplemental Security Income (SSI) is available to individuals who are either over 65 or blind/disabled. In addition, it’s reserved for those with limited resources.

Social Security and Your Estate Plan

If you need Social Security income, whether for yourself or your family, it’s important to consider how it could affect your estate plan.

Your Estate Could Impact Benefits

For example, the assets you have in your estate could impact your eligibility for certain benefits. In particular, SSI is only available if your countable assets are worth less than a certain amount. If the accounts and assets in your estate are worth more than $2,000, you won’t qualify. As such, it may be worth setting up a trust in order to reduce the value of your estate.

Consider a Special Needs Trust

If you specifically need SSI to supplement your income, or if one of your beneficiaries relies on SSI benefits, forming a special needs trust may be the right course to take. These trusts are specifically designed to help you qualify for SSI benefits, but only if they’re structured correctly. An estate planning attorney is therefore vital to helping you qualify for benefits in this case.

Designate a Representative Payee

Power of attorney is an important component of any estate plan. However, the Social Security Administration doesn’t recognize power of attorney. Because of this, you’ll need to contact the SSA and designate a representative payee to handle your funds on your behalf in the event that you become incapacitated.

Make Sure Your Executor Knows Their Duties

In addition to the financial aspects of social security, you’ll need to make sure your executor knows their administrative duties regarding SS income. Upon your passing away, they need to notify the SSA and repay any overpayment of benefits that might occur.

Effective Estate Planning with Social Security

When creating your estate plan, an attorney can help you account for social security benefits. Contact an estate planning attorney today to get your affairs in order before it becomes urgent.

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