The Social Security Administration administers two benefit programs for the disabled: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Eligibility for disability is based on your work record and record of Social Security payroll taxes, but SSI does not require that an individual have a work history or pay in to the system. SSI is a means-tested program. In determining eligibility, the agency limits an applicant's income or assets, including those placed into a trust account.
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To be eligible for SSI, you must be disabled and have very limited income and assets, i.e. financial resources. As of 2012, resource limits were $2,000 for an individual and $3,000 for a married couple. Social Security counts bank accounts, investments, property (excluding your principal residence), a second car or motorcycle, jewelry and other valuables, and "in-kind" benefits such as housing, food or other support provided by a relative. Assets held in a trust may count toward your resource limit, depending on how the trust is structured.
Trust Control and Income
If someone else has established a trust and named you as a beneficiary of that trust, you should declare the trust to Social Security when applying for SSI benefits. Social Security will make a determination based on control of the assets in the trust. If the trust is revocable, it will be counted toward your resource limit. If the trust is irrevocable, but you are allowed to manage and control the assets in any way (for example, as a trustee), it is also counted. In addition, any income that you draw (or could draw) from the assets in a trust will count against your monthly non-wage income limit. As of 2012, that limit stood at $718 for an individual and $1,068 for a couple.
If you divert your own money to a trust, you must inform Social Security. Money you control, no matter how you control it, is counted as a resource. If you attempt to place money in a trust to shelter it from SSI eligibility rules, you are committing fraud and could be prosecuted. The same applies to any money drawn from a trust and spent, no matter what the purpose of the spending is. If you draw SSI benefits while failing to report income or resources, Social Security will charge an overpayment and start collection actions.
Social Security also has rules for Special Needs Trusts or SNTs. These trusts are designed to disburse money for an individual's medical and care expenses. Someone with a permanent disability resulting from an accident, for example, may have an SNT established by an insurance settlement. Social Security will exempt assets and payments from SNTs depending on how the trustee collects and spends the money.