Spousal Maintenance and SSI
When you are a recipient of an SSI, make sure your divorce attorney has a good working knowledge of SSI’s income and resource rules. Without that expertise, a good part of an otherwise good settlement or court-ordered payments could go to the government in the form of reductions to SSI.
Example 1Jennifer suffers from ruptured disc. She is separated from her husband, and her only income is Supplemental Security Income (SSI) of $734 per month. Jennifer's husband, Jim, is a construction worker with a limited income.
Jennifer hired a divorce attorney who aggressively advocated for her and obtained a favorable property settlement. In addition, starting next month, Jennifer will receive a $755 per month.
Except first $20 of her spousal maintenance, the SSI program will count the remaining $734 to reduce her monthly SSI check to $0.
Now consider this alternative.Consider this alternative. Jennifer's husband agrees to pay up to $755 a month as direct payments to her creditors. The direct payments cover a car payment and insurance, a phone bill, a house-cleaning service, and a cable television/internet bill. Since these payments are neither cash or in-kind payment for food and shelter, these payments will not be treated as income by the SSI program and will not affect her eligibility. She will continue to receive her monthly SSI check.
Direct Payments for FoodIf the direct payments cover basic shelter expenses such as rent, mortgage, taxes or utilities, this will result in as much as a one-third loss of SSI. However, at least the disabled spouse will continue to receive SSI even though in a reduced amount. Where assets are limited, one option may be transferring the house to the disabled spouse and having the spousal maintenance payments made directly to the service provider in the form of mortgage, tax, and utility payments. The house is not considered a resource as long as the disabled spouse lives in it, and she can still keep two-thirds of SSI, in addition to receiving the spousal maintenance payments.
Example 2For example, the same scenario as above, except Jim is able to pay $2000 per month. Jennifer and Jim own a house and currently pay $1200 per month for mortgage and taxes. The spousal maintenance can be structured as follows: $1200 will be paid directly to the bank for the mortgage and to the county for the property tax. The remaining $800 will be paid directly to the service providers for her car loan and insurance payments, cable services, cell phone services, and lawn care services. The total income for Jennifer will be $2000, plus $489.
ConclusionWhen you are a recipient of an SSI, make sure your divorce attorney has a good working knowledge of SSI's income and resource rules. Without that expertise, a good part of an otherwise good settlement or court-ordered payments could go to the government in the form of reductions to SSI.