How does a $75,000 inheritance affect SSI benefits at age 71, with $50,000 divorce debt?

Question

I am 71 years old and currently receiving SSI benefits. I recently inherited $75,000, which will be given to me as a check. I also have over $50,000 in debt due to a divorce in the last year. I am concerned about how this inheritance might affect my SSI benefits. I don't receive any other benefits. Could you provide guidance on how this inheritance impacts my SSI and whether my debt will play a role in it?

James L. Arrasmith · Answer

When you receive an inheritance while on SSI, the Social Security Administration counts it as income in the month you receive it. That $75,000 will push you far over the asset limit, which is normally just $2,000 for an individual. This means your SSI payments would likely stop once the inheritance is deposited, because you would no longer meet the resource requirement. 
 
The debt you owe from your divorce, even though it is significant, does not reduce the inheritance in the eyes of Social Security. SSI rules focus on what assets you have available, not on what debts you carry. So, unless you spend the inheritance in a way that complies with program rules, your benefits will be suspended or even terminated once the funds are in your name. 
 
At age 71, if you worked enough during your lifetime to qualify for Social Security retirement benefits, you might want to check if switching to those benefits is possible, since they are not needs-based and would not be affected by your inheritance. If not, you may need to carefully plan how you use the inheritance, because large purchases or gifts can create further complications with SSI rules. It would be wise to get advice before you act, so that you can protect your long-term financial stability while dealing with both the inheritance and the divorce debt.

Q: How does a $75,000 inheritance affect SSI benefits at age 71, with $50,000 divorce debt?