SOCIAL SECURITY ADMINISTRATION PENALIZES CERTAIN ASSET TRANSFERS

Here's the deal. Lets say a person wants to receive SSI (the federal welfare program available to people who are poor and disabled and under age 65) but has assets which exceed $2,000. Previously the person would transfer excess assets to family members who might then use the assets for the disabled person. The point was that the applicant would be eligible for SSI because the applicant would meet the $2,000 poverty standard.

Now asset transfers will make a person ineligible for SSI for a period of time depending on the value of the assets transferred, EXCEPT if the assets are transferred to a Supplemental Needs Trust. Thus trusts for SSI recipients are even more important today. Understand that not any trust will work. It must be a supplemental needs trust that meets the requirements of law. The chief requirement is that at the death of the SSI applicant the assets in the trust must be used to repay the SSA.

NOTE: Step away from the rule and think about what Congress and the Clinton Administration is saying. "We want to protect disabled people who are in need; we are not seeking to benefit family members. We will allow a disabled person to transfer assets to a Supplemental Needs Trust for that person's benefit; we are not prepared to allow the person to benefit others at the expense of the government.

This sounds like a balanced and reasonable approach.