Can Social Security Disability Be Used In Estate Planning?
When you are planning your estate, consider how social security disability (SSD) can impact your survivors. The first thing you need to do is find out if you may be eligible and apply to receive benefits. If you already receive SSD and you have children or parents who depend on your income, it’s important to know what they will receive after your death.
Conversely, if you are the dependent of someone on social security disability, you need to understand what your benefits will be after your parent, child or guardian passes away.
Many people don’t understand how easy it is to become disabled. One study indicated that one in three 20-years-olds become disabled before retirement. Unfortunately, many of them don’t know about or don’t apply for benefits.
Who Is Eligible To Receive Disability?
Many people assume that social security is just a program for retired workers, but it is not. Therefore, it’s important to know who is eligible for Social Security Disability and to apply if you are eligible, as many people do not.
Those who can’t work due to an injury or illness that will last at least a year can apply. Consideration requires demonstrating that you have worked recently (this varies but say within the last three to last 10-year range). You also need to show you have worked long enough to qualify (typically 5.5 years).
Who Can Consider Using SSD In Estate Planning?
If your disabled relative dies, you may be able to receive their Social Security Disability Insurance (SSDI). Eligible relatives include spouses, dependents, children, or dependent parents.
You may be able to receive your deceased spouse’s SSDI if you are:
- Raising a child under 16 who gets Social Security via your spouse. The benefit is 75 percent of your spouse’s SSDI.
- Over 50 and disabled: 71.5 percent
- Over 60 and not retired: 72 to 99 percent
- Retirement age: 100 percent
Several things can impact your ability to get your spouse’s disability. If you remarry or work, you receive no benefit or a reduced benefit, respectively. In most cases, eligibility requires nine-months of marriage.
You could claim survivorship benefits if your parent died while on SSD. Social Security includes natural children, adopted children, and stepchildren as children of a parent. Children can receive up to 75 percent of the benefit until they turn 18 years.
If you are over 19 and the adult child of someone who received social security, you can receive your parent’s SSD benefit if you are:
- Under 19 years old and a full-time student in a secondary school (includes high school, but not college.)
- You have been disabled since you were younger than 22 years old.
Adult children receive 75 percent of their deceased parent’s SSDI benefit.
As a grand or step-grandchild, you can receive survivor benefits if:
- Your parent (s) are dead
- You lived with your grandparent while you were under 19 years old.
Qualified grandchildren get 75 percent of their grandparent’s social security disability benefit until their 18th birthday.
Elderly Parents Of A Deceased Child
If a disabled child passes away, and they provided substantial support to an elderly parent, their elderly parents can receive their disability. The elderly, dependent parent has to be over 62 and reliant on their disabled child for more than half their income.
Understanding how social security disability impacts your family is the key to optimally incorporating it into your estate planning and look out for those you love.
Brian Mittman is a managing partner at The Disability Guys, P.C. Brian has experience in workers comp, social security, and personal injury law.