Can Someone with Disabilities Inherit Money without Losing Government Benefits?~4 min read

You can leave an inheritance to a loved one with a disability without affecting their eligibility for programs such as Supplemental Security Income (SSI) and Medicaid. The key is planning how the inheritance is received. A direct gift or inheritance may place assets in your loved one’s name and disrupt benefits, but a properly structured Special Needs Trust allows those funds to support your loved one while preserving eligibility. ABLE accounts may also play a supporting role in some situations.

How Inheritances Can Affect SSI and Medicaid

When you plan for a child or loved one with a disability, you want your support to help them, not unintentionally harm their financial stability. Programs such as SSI and Medicaid have strict asset and income limits. If your loved one receives money or property outright, those assets may be counted toward those limits.

Even a modest inheritance can push someone above eligibility thresholds and cause benefits to stop. Restoring eligibility later can be difficult and disruptive. Thoughtful estate planning allows you to provide financial support while maintaining access to essential programs.

Special Needs Trusts

A Special Needs Trust (SNT) is specifically designed to hold and manage assets for a person with a disability without those assets being treated as the beneficiary’s own resources for SSI and Medicaid purposes.

You can direct an inheritance into a Special Needs Trust through your will, trust, or beneficiary designations. Because the trust owns the funds rather than your loved one personally, eligibility for benefits is preserved.

A properly drafted SNT can:

• Hold inherited money, life insurance proceeds, or gifts
• Pay for quality-of-life expenses not covered by benefits
• Provide long-term financial management
• Protect eligibility for SSI and Medicaid

This structure allows your loved one to benefit from the inheritance while maintaining the programs that provide housing, medical care, and basic support.

How ABLE Accounts Fit into the Plan

An ABLE account is a tax-advantaged savings account for individuals with disabilities. It allows eligible individuals to save up to the annual federal contribution limit without losing eligibility for Medicaid, SSI, or other public benefits. In Texas, eligibility requires that the disability began before age 46. Funds in a qualifying ABLE account are not counted toward SSI resource limits within federal thresholds.

ABLE accounts are often helpful for:

• Day-to-day qualified disability-related expenses such as housing, transportation, food, health and wellness, and support services
• Smaller spending funds for routine disability-related needs
• Promoting some financial independence

Because contribution limits apply and balances affect SSI once they exceed certain levels, ABLE accounts are typically best used alongside not instead of a Special Needs Trust.

Using a Trust and ABLE Account Together

In many plans, a Special Needs Trust holds larger or long-term assets, while an ABLE account provides accessible funds for routine expenses. This approach allows both protection and flexibility.

For example:

• Inheritance funds flow into the Special Needs Trust
• The trustee may periodically transfer limited amounts to the ABLE account
• The beneficiary uses the ABLE funds for qualified expenses

This structure keeps primary assets protected while allowing practical spending support.

Why Planning Ahead Matters

Leaving assets directly to a loved one with a disability can unintentionally place benefits at risk. By directing inheritances to a Special Needs Trust and coordinating with any existing ABLE account, you can provide lasting financial support without disrupting essential programs.

Contact Springer & Lyle

If you have a loved one with a disability who receives SSI or Medicaid, careful planning is important before leaving an inheritance or financial support. The attorneys at Springer & Lyle help families structure Special Needs Trusts that protect benefits while providing long-term security. To discuss your planning needs, contact Aubry Dameron at 940-387-0404.

Springer & Lyle is located at 1807 Westminster, Denton, TX 76205.

Frequently Asked Questions

Will an inheritance automatically disqualify my disabled loved one from government benefits?
Not if the inheritance is directed to a properly structured Special Needs Trust or coordinated with an eligible ABLE account.

What is the age requirement for an ABLE account in Texas?
The disability must have begun before age 46 to qualify under current law.

Can I control how inherited funds are used?
Yes. A Special Needs Trust allows you to set terms for distributions, so funds enhance your loved one’s quality of life without affecting eligibility.