Answer to the Question of the Month

Question:

My wife and I are planning to move to Colorado Springs from California.
My Wife receives SSI because she is blind, not totally but differently
abled. She has received this since she was a teenager. With the money
that we would get from our house in California I am concerned about. I
believe that the amount that we would receive from the house would
jeopardize her SSI. I would like to put this money into a trust or I
guess it is called a special needs trust. What steps can we do to get
this taken care of before we move with all the money. thank you, Daniel
and Dana

Answer:

Daniel and Dana, thank you for your question:

It would be our thought that you should consider taking the proceeds from
the sale of your house in California(which we assume is currently excluded
from assets under SSI) and use these proceeds to purchase a new home in
Colorado Springs. After the sale of your home in California you have three
months to use the proceeds to buy a another home which would also be
excluded from the asset criteria in SSI rules.

We would not comment on the use of the proceeds to put into a supplemental
needs trust. We think there may be problems in doing this.

In any case, you need a lawyer to assist you either way you go.

Below we have outlined the Policy of SSA for the sale of an excluded home
using the proceeds to purchase another. Good luck!

SI 01130.110 Home Replacement Funds
A. POLICY PRINCIPLES

1. General
When an individual sells an excluded home, the proceeds of the sale are
excluded resources if the individual:

a.. plans to use them to buy another excluded home, and

b.. does so within 3 full calendar months of receiving them.

2. Installment Sales Contracts
If the individual receives the proceeds under an installment contract, the
contract is an excluded resource for as long as the individual:

a.. plans to use the entire downpayment and the entire principal portion
of a given installment payment to buy another excluded home; and

b.. does so within 3 full calendar months of receiving such downpayment or
installment payment.

B. OPERATING POLICY
1. Proceeds Defined

a. If Paid in a Lump Sum, the proceeds are the net amount the seller receives at settlement.

b. If Paid in Installments the proceeds consist of:

a.. any downpayment; and

b.. that portion of any subsequent payment that is not interest.

2. Allowable Uses Of Proceeds
Use of proceeds to buy another excluded home includes payment of any costs
that stem from the purchase. These include,but are not necessarily limited
to:

a.. downpayment;

b.. settlement costs;

c.. loan processing fees and points;

d.. moving expenses;

e.. necessary repairs to or replacements of the new home's structure or
fixtures (e.g., roof, furnace,plumbing, built-in appliances) that are
identified and documented prior to occupancy; and

f.. mortgage payments.

Use of proceeds to pay other costs will warrant their exclusion if such
costs are identified and documented prior to occupancy and stem directly
from the purchase or occupancy of the new home.

3. Timely Use Of Proceeds
a. Timely
"Within 3 full calendar months" means by the end of the last day of the
third month after the month in which the proceeds are received.

b. Use
"Using" the proceeds includes obligating them by contract as well as
actually paying them out.

c. Proceeds Not Used Timely - Lump Sum
The exclusion of the unused funds will be revoked retroactively to the date
of their receipt.

d. Proceeds Not Used Timely - Installment Payments
The exclusion of the installment contract itself, and of the unused portion
of any installment payments,will be revoked retroactively to the date the
unused proceeds were received.