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SSI: Eligibility: Transfer of Assets (Resources) To Qualify


Some people transfer assets to children, parents or friends in an attempt to qualify for SSI, and even more to receive Medicaid which usually accompanies SSI.

When determining whether a transfer is permitted, there are certain transfers that are allowed. Other transfers depend on the facts involved.

If a transfer is made which is not allowed, such as a transfer of assets for less than fair market value for purposes of getting or retaining SSI eligibility, there may be a penalty of up to 36 months before you can receive SSI.

If you are considering making such a transfer to obtain Medicaid, see Medicaid.

Allowable Transfers

You can transfer an asset and still qualify for SSI in the following scenarios:

  • Sale of the asset for fair market value.
  • Spend-down the money for goods or services. For example, use the money to purchase food.
  • Create a self-settled trust if you are under age 65.
  • Receive an asset in trust form someone else who is not on SSI.
  • Give away property under an allowable exception such as:
    • Transfer to an allowable trust
    • Transfer real property to certain allowable family members
    • Return an asset to the person who gave it to you
    • Undue hardship

Transfers Which May Not Be Allowed

With transfers of resources not described immediately above, Social Security will examine the transfer, what has been transferred and to whom.

  • The Type of the Transfer:
    • If the transfer is temporary or a loan or not legally binding, then the property is counted as part of your resources and eligibility will be denied if the value transferred this way exceeds the resource limit. For Example: Annie B. transferred all $5,000 that was in her savings account into her mother's account. Unless Annie can show a valid reason for the transfer, such as paperwork showing it was to pay back a loan, Social Security will assume the money is still under Annie's control. Since the amount exceeds the maximum resources she can have and qualify for SSI, Annie will be denied SSI.
    • Another transfer that does not work is the sale or gift of property to someone else for less than the actual value. For Example: David B. owned a vacant lot that kept him from meeting the resource limit for SSI. If he sold the land worth $3,500 to his sister for $250, his SSI claim would be denied because it was transferred at less than market value. For purposes of SSI, David would be deemed to still own the resource equal to $3,500. If David B. sold the lot to a total stranger, even though it was for the same $250, he would qualify for SSI because there is no way the transaction could be claimed to be a sham.
  • The Reason for the Transfer
    • It is possible to give away assets and still qualify for SSI if there is a reason other than just qualifying for SSI. For example, you can give $5,000 cash to your daughter for her wedding. The idea is that you are giving money away because of a life event, not to qualify for SSI. If the $5,000 is all you had other than your house, furnishings and car, you would qualify for SSI.
    • While the same reasoning should hold up if you give real property as a gift instead of cash, Social Security may give you more of a hassle because a transfer of real property can be viewed as a transfer for less than fair market value (which is not permitted) instead of a gift for a life event.
    • Financial planners suggest that you don't give away your house. It's one of the resources that SSI doesn't count when determining how much money you have.
  • The Timing of the Transfer
    • Until 1999, the only transfers that were questioned were those made almost immediately before applying for SSI. In 1999 Congress changed the law to require that transfers within the 36 months prior to filing have to be examined. Not only are transfers for less than fair value during that period counted as resources, there is also a penalty for making those transfers if the purpose is to qualify for SSI. The penalty is that Social Security will count the asset you transferred as if it is still you owned it for three years from the date of the transfer - effectively keeping you disqualified for three years.
    • For example: If David B had transferred the empty lot worth $3,500 to his sister for $250. more than 36 months before applying for SSI, the lot would not be counted as one of his resources. If he did it less than 36 months ago to qualify for SSI, the land would not count as a resource, but his eligibility for SSI would be postponed during a "Penalty Period." (See below).
    • If you have liquid assets (such as cash, savings or CDs) that are keeping you from qualifying for SSI and you own your home, consider making improvements or repairs to it. Money you invest in your home is no longer counted as an asset. For example: You spend $3,500 of your $5,000 savings account to add a bench and handrails to your bath, and to add handrails and other safety features to the stairs and the outside porches. The money spent becomes part of your home and is not counted as a resource.
  • NOTE: If you make a transfer of assets within the 36 month period before applying, you may not be able to receive SSI, but you may be able to still qualify for Medicaid. (SeeMedicaid).

Penalty Period

The penalty period for a transfer of assets for less than fair market value for purposes of getting or keeping SSI eligibility is determined as follows:

Take the full uncompensated value of the transferred asset and divide it by a number equal to the total of:

  • The full Federal Benefit Rate for the year PLUS
  • The actual amount of any state supplemental payment the individual is entitled to receive

The result is the number of months' during which there is a penalty period and you will not receive SSI benefits.

For information on the Federal Benefit Rate, see: SSI: Benefit Amount.

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