Will an Inheritance Affect Special Needs Benefits in Washington State?

When a loved one in Washington State receives an inheritance, families often feel relief followed quickly by worry. For individuals with disabilities who rely on SSI, Medicaid, or other essential supports, even a small inheritance can unintentionally jeopardize their benefits. 

This blog explains how inheritance and special needs benefits in Washington interact, what families need to know about SSI inheritance rules in Washington, and how tools like a special needs trust can protect long-term financial stability and care. 

Understanding SSI Inheritance Rules in Washington State 

Supplemental Security Income (SSI) has strict financial limits. Recipients in Washington State cannot have more than $2,000 in countable resources as an individual or $3,000 as a couple. When someone receiving SSI inherits money or property, the Social Security Administration counts this as either income or resources, depending on timing. 

Even a temporary increase in assets can trigger benefit suspension or termination, leaving individuals without monthly income or healthcare coverage. Understanding how these rules apply is an essential part of estate planning for families with special needs members. 

Medicaid and Inheritance in Washington: What Families Need to Know 

Medicaid provides critical healthcare coverage for many Washington residents with disabilities. Like SSI, Medicaid has strict resource limits. The standard Washington State Medicaid resource limit is $2,000 for an individual. 

When someone on Medicaid receives an inheritance, they must report it to the Washington State Health Care Authority. Depending on the amount, this could result in loss of coverage until inherited assets are spent down. For individuals receiving long-term care services, losing Medicaid coverage can be devastating. 

Navigating SSI or Medicaid rules after an inheritance can feel overwhelming. Our Washington State attorneys can help you protect eligibility and avoid costly mistakes. 

How a Special Needs Trust in Washington State Can Protect Benefits 

A special needs trust holds assets for the benefit of a person with disabilities without disqualifying them from government benefits. The trust pays for supplemental needs like therapy, education, and recreation while preserving access to essential programs. 

A first-party special needs trust holds assets belonging to the person with disabilities, such as a direct inheritance. A third-party special needs trust holds assets belonging to family members. When structured properly as part of your wills and trusts planning, third-party trusts are the preferred option for inheritance planning and don’t require Medicaid payback. 

Estate Planning Strategies to Protect a Special Needs Child or Adult 

The most costly mistake families make is leaving assets directly to a loved one with disabilities. A well-intentioned inheritance can immediately disqualify someone from benefits. 

Better alternatives exist through strategic special needs planning. Instead of naming your disabled loved one as a direct beneficiary, name a third-party special needs trust as the beneficiary of your estate, retirement accounts, or life insurance policies. This ensures the inheritance enhances their life without threatening eligibility. 

Protecting Your Loved One’s Benefits With the Right Support 

An inheritance should strengthen your loved one’s future, not threaten their access to critical supports. Whether you live in Seattle, Washington, Richland, Washington, or anywhere in the state, our team can help ensure your estate plan supports both financial security and continued benefits. 

If you want clear guidance on Washington special needs planning or need help navigating inheritance rules, reach out to us today to schedule a consultation with a Washington State special needs planning lawyer. 

This article is for informational purposes only and is not legal advice. Your circumstances are unique, and an attorney can provide guidance that fits your needs.