When it comes to receiving a lump sum settlement while you’re receiving Social Security disability benefits, there are some important things to keep in mind. That’s why Social Security disability attorney Merryl Jones, Second Chance Lawyer, has collected the facts for you here if you’re wondering, “how does a lump sum settlement affect Social Security disability and is SSDI taxable?”.
How Personal Injury Settlements Can Affect Your Disability Benefits
The Social Security Administration (SSA) is responsible for providing both Supplemental Security Income (SSI) benefits in addition to Social Security Disability Insurance (SSDI) benefits. Often, in the case of a personal injury lawsuit that leads to a significant settlement, the particular type of disability insurance benefits you’re receiving (SSI or SSDI) can affect you monetarily.
For those receiving SSDI benefits that receive a lump sum settlement, their monthly benefits should not be affected because a person’s employment history is what determines their benefits. However, in terms of those receiving SSI benefits, it can reduce your monthly payments because a large monetary settlement will directly affect your asset limitations. In some cases, depending on the size of the settlement, it can also make you ineligible for SSI benefits.
Protecting Your SSI Benefits After a Lump Sum Settlement
One of the best ways to protect your SSI benefits after receiving a cash settlement from a personal injury suit is by working with an attorney and exploring your options. Some of the things you can do are:
- Spending Down Settlement Proceeds
Spending down means when you spend excess money on exempt resources, such as donations to nonprofits or other things, to return your income levels back to normal. Such investments also include paying off your mortgage, prepaying your funeral expenses, and making home modifications to help accommodate your disability.
- Creating a Special Needs Trust
Forming a special needs trust is another good way to level out your income after a settlement and ensure you still retain your disability insurance (SSI) benefits, as well as the lump sum you’ve received. A special needs trust covers needs that SSI traditionally doesn’t cover, like different types of therapy, legal fees, nursing, and in-home care.
Let Merryl Jones, Second Chance Lawyer, be your Social Security disability attorney!
Merryl Jones, Second Chance Lawyer, has helped many throughout Texas obtain the benefits they deserve and appeal their cases. Learn more by contacting our offices online or by calling (254) 275-6508 to request a free case evaluation to learn more about disability insurance settlements and whether SSDI is taxable..
