Mark E. Biernath: Hi, my name is Mark Biernath. I’m an estate planning attorney here in the Atlanta area, with a special emphasis on special needs planning.

I’ve got a question here: “Our son is on SSI and is living at home. The case manager said that his SSI benefit is being reduced by one third because we are providing him housing. What should we do about that?”

By providing your son housing you’re providing what Social Security calls “In-Kind Support”. Since you’re providing housing, Social Security takes the view that they don’t have to. And so they’ll reduce his benefit by the value of that in-kind support. And the one third reduction is simply the easy way for Social Security to calculate that. That’s the presumed maximum value, or PMV, is one third reduction. And so one third of his SSI benefit is reduced simply because someone else is providing either for his food or his shelter cost.

What can we do in order to restore that full amount of SSI benefit? And one of the most common things is somehow your child has to pay for his room and board. And you can do this through a Room and Board Agreement or Rental Agreement and simply charge a set amount of money per month for his room and board. By having this room and board agreement, you are then able to establish to Social Security that the SSI recipient is paying for their room and board. The Room and Board Agreement should be in writing, it should reflect a reasonable amount; it has to be fair market value.

And one of the questions I have heard comes up from Social Security is they’ll ask you if you’re the landlord, “Would you charge a complete stranger living in your home this amount of money?” And I’ve heard some parents say, “Well, no. We’d charge them more”. Well, if you charge a complete stranger more to live in your home, then you’re not charging your child fair market value. That means also if you’re not charging him the full amount, you are again supplementing or subsidizing the amount that they pay for their living expenses. Also, it does include boards. So the meals at home are included in that cost.

And so if you have a child that either eats a lot or has a specific diet, of course, that would then increase the cost of that. Be prepared to explain that if it is significantly more, than somewhere in that 450-500 dollar range. But once you have that Room and Board Agreement in place, that needs to be presented to the case manager so that they can evaluate it and then restore the full benefit. Now, there is an issue about who can enter into the agreement. If your child has capacity, they can enter into the agreement. Once they’re over the age of 18 legally they have capacity unless, of course, you have been to court and have had that child declared incapacitated through a guardianship proceeding. If there is a guardianship in place then it must be the guardian who signs the agreement.

As a planning consideration for the future, you may wish to consider whether your special needs trust contains a provision allowing the trustee to either charge the beneficiary room and board for whatever housing the trust is providing, or in the alternative, does the trustee have the discretion to accept a reduced SSI amount. Often times one of the main concerns of parents who are planning for the kids is: “What kind of living environment are they going to be in?” And if your plan is to have your house and your primary residence be owned by the special needs trust so that your child can continue to live there, your trustee needs to either be able to charge them Room and Board, or in the alternative accept that reduced SSI payment.

I hope you find these videos helpful. If you have any questions or comments, we welcome you to write those below if you’re on YouTube in the comment section. Or you can send us an email at mark@biernathlaw.com

Whether your official retirement age is 65 or 66, which will depend on when you were born, it is better to wait for that time rather then request your payments at a younger age. The reason is simple: if you decide not to defer your payments, you may end up paying the money back.

This is because anyone who is still earning a wage that is not directly related to an investment income from a healthy portfolio may not qualify for full Social Security as an untaxed income. This is also dependent upon the limitations placed annually on income levels. For example, this year the limit is $14,160. Every time you go over that amount by $2, you will lose $1 off of your checks. This adds up quickly, especially since most who are still working will receive much more then that.

This rule only applies for those who are not yet at their retirement age. Once you hit that point, you will be able to earn any level of income, and still receive full benefits from your Social Security fund. So don’t worry about losing the funds in the meantime, they will still be there. Deferring your checks is a positive move, not a negative one, and as long as you don’t wait too far past your retirement age, you should be just fine.

Consider saving benefits for age 65 – 70. You might be glad that you did.

At 62 years of age you are able to apply for the benefit, and you report down to the Social Security office, show your identification, your birth certificate and proof of age, and then you can apply and receive a check shortly thereafter, and that check will be automatically placed in your bank account on a monthly basis for the rest of your life. You can maximize your check even more if you defer applying at 62 and rather apply at 65, 66 or older. The older you are, the more your check will be. This is financial advisor Patrick Munro talking about how to maximize your Social Security Benefits.

Watch the video here.

If you are able to defer applying for Social Security at age 62, each year you defer the amount that you will receive on your check goes up in value. At 65 in other words, you would receive a longer period of time would pay a larger amount of money for your check. However, with that being said with financial situations, most Americans are not well prepared at that particular age, and they do in fact apply for Social Security and they receive their check. It’s a burden on the government and on the taxpayer; something that we are still working on an active basis. This is Patrick Munro talking about how to receive Social Security.

Watch the video here.

There would be a period of time that goes by while your claim is being considered by the Social Security Administration office, and at that time they will render a verdict as to how much money you’ll be getting back benefits. If you’re uncertain as to your representation, you can retain council or a legal lawyer who will represent you in your Social Security matter with the Social Security Administration. This is Patrick Munro, financial advisor, talking about how to collect back benefits from Social Security.”

Watch the video here.

There are ways to avoid this if you use appropriate investments such as annuities and things of that nature, and working with a financial advisor that knows how to read a tax return is always of great benefit to you. Many senior Americans do not want to be taxed on their Social Security benefit and like Franklin Delano Roosevelt said, “It’s not intended as a tax resource.” This is Patrick Munro talking about the taxes on Social Security benefits.”

http://www.youtube.com/watch?v=XGdhjKZt8tA