Inheritances and SSI


People who get Supplemental Security Income (SSI) know they need to report changes in income and resources to the Social Security Administration (SSA). Most people do not think they need to do anything until they actually get the money. If you get SSI and you are going to inherit something, that could create a problem. You could end up having an overpayment or even lose your SSI benefits.

Inheritances and a Little-Known Iowa Law
Social Security rules treat an inheritance as income earlier than you may realize. The inheritance counts as soon as a person is known to be a beneficiary of an estate. You become a beneficiary before you get the money or property. The reason is that Iowa law allows a person to sell his or her right to get an inheritance. Not many people know this rule about inheritances and there is no real market for such inheritance shares. However, they can be sold. Social Security says the recipient could sell what he or she will inherit as soon as it is clear the person is a beneficiary. This becomes income in the month it is known the person will inherit the property or money. If the inheritance share is not sold, it is considered a resource for each following month.

Most people do not report an inheritance to SSA until they get the item(s) of value. If this happens, Social Security may go back to when the estate was opened and assess an overpayment. If the value of the inheritance put someone over the income limits but he or she continued to get SSI, the SSI benefit they received would be considered an overpayment. Then the person would lose his or her SSI until the inheritance is spent down. If an overpayment was assessed, benefits will continue to be reduced until the overpayment gets paid back.

The Impact of an Inheritance on Household Income
SSI is a program that provides an income to people who do not have much income or many resources. Recipients are probably used to getting a regular check, and then budgeting their expenses to live on that limited income. If you are getting SSI benefits and know you are going to inherit items of value in an estate, it is important to plan ahead. Although your regular expenses will continue, your SSI benefits could change.

One other thing to remember is that a person getting SSI and Medicaid cannot dispose of resources for less than fair market value just to stay eligible for those programs. Disclaiming or refusing to accept an inheritance is considered an illegal transfer of assets. Therefore, you cannot use a disclaimer to avoid this problem.

Options to Consider
You have some choices to consider when your interest in an estate becomes clear. As noted above, in Iowa you can sell that interest in an estate. You must report your interest in the estate to SSA. An example of this might be if you were to inherit a portion of some property, and decided to sell your interest in the property to another beneficiary who also got a part of the property. Money someone would get from selling his or her interest in an estate could put the person over the income or resource limits for SSI. In such a case, SSI benefits could be stopped, and the individual would use their new resources to pay living expenses instead of getting SSI. If the SSI benefits do not stop coming to someone who goes over the program's income or resource limits, the money will be considered an overpayment. Someone who is over income on a short-term basis can again become eligible for the program after their resources are back to the income limits for SSI.

It may be the case that person inherits an interest in an estate which has little or no value. For example, suppose a relative made a bad real estate investment bought some worthless swamp land somewhere, and they passed the title for the land on to you as part of an estate. If an interest in something you inherit cannot be sold and therefore has no value, you could get statements to that effect from several qualified sources. In such a case, you would still report it to SSA, but the income value and resource value would be very small. As long as that amount does not put you over the SSI income or resource limit, it would not affect you until you actually get the money. Once you get the money or property, it obviously has the actual value. At that point, you must report the amount to SSA.

If you did not report an inheritance when you first became a beneficiary, you will probably be assessed an overpayment. After you get notice of an overpayment, you have the right to appeal within 60 days. You should appeal and try to present evidence that there was no value to the share of the estate until distribution. All of the appeal steps involved in a Social Security case are available.

If you get SSI and need details on what an inheritance could mean for you, contact Iowa Legal Aid.

Iowa Legal Aid provides help to low-income Iowans. 

To apply for help from Iowa Legal Aid:

  • Call 800-532-1275. 
  • Iowans age 60 and over, call 800-992-8161.
  • Apply online at

If Iowa Legal Aid cannot help, look for an attorney on “Find A Lawyer”   A private attorney there can talk with you for a fee of $25 for 30 minutes of legal advice.

*As you read this information, remember this article is not a substitute for legal advice.

Last Review and Update: Jan 04, 2022
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