An Inheritance Can Impact Means-Tested Benefits

• Although inheritances, both cash and real property, are generally not subject to income tax, the amounts are still considered as reportable income and assets for purposes of eligibility for scholarships, financial aid and other public means-tested benefits. For example, if you inherited $1,500, then your reportable income for that month would also increase by $1,500, which could affect your eligibility for means-tested public benefits. With some exceptions for surviving spouses, any property you inherit such as a car or real estate also becomes your asset and increases your total assets, which could impact your eligibility for any means-based programs.
  
  

SSI and Medicaid

• Supplemental Security Insurance, or SSI, is a means-tested public benefit program. If you receive money or assets that count income, such as cash from an inheritance or lawsuit, and if the amount you receive is greater than your monthly SSI benefit, then you are probably not entitled to your SSI benefit for at least the month you receive your settlement. Note that losing your eligibility for SSI can also cause you to lose your eligibility for Medicaid, as eligibility is "piggybacked" on SSI in many states. A number of states offer various other means-based public benefit programs for the disabled (transportation, shopping and so forth) that will probably be impacted by a significant inheritance.
  
  

Non-Means-Tested Benefits Are Not Impacted

• However, a number of other non-means-tested public benefits programs including workers' compensation, Social Security Retirement and Social Security Disability will not be impacted by an inheritance. You receive these benefits because of your status as disabled and/or your contributions to your Social Security retirement account.
  
  

Special Needs Trusts

• If you receive an inheritance (or other settlement) greater than $25,000 or a smaller amount that you do not want to spend within a month, then you should consider a special needs trust. A special needs trust lets you to keep the money you inherit, but prevents it from being considered a countable asset for SSI. You will need an attorney to help you draft the trust documents, and be aware there are some limitations on what you can spend the money on if you set up a trust.