My dad passed away, and I was his caretaker for many years. He wanted me to inherit his Social Security benefits. I myself am a disabled person, and my mom has also passed away. I contacted the Social Security office, and they’ve told me I couldn’t receive his benefits because I wasn’t a dependent child on my father and was able to take care of him. My question is, is there some other way I can get around what I’m being told?
He also had retirement funds he wanted me to have, and they’re telling me he was supposed to update his account two months or so before he passed away and he didn’t, so they’re saying that I’m not entitled to that, either, even though he left me as sole beneficiary. You’re my last hope in solving these questions, I’ll drop them if you can’t answer them for me. I’m exhausted and financially stressed but happy I was able to take good care of my beloved dad. I just need to fulfill this last thing because I need closure.
Thank you for any help you can give.
— Bereaved and Distressed
I’m so sorry for this challenge you’re facing in the midst of a loss in your family, and I appreciate you taking a moment to celebrate your ability to take care of your dad all these years.
Navigating inheritance can be challenging under any circumstances, so I recommend you consult a professional financial planner and an estate or probate lawyer, both of whom can advise you individually on your options.
I reached out to a few such experts to share some general information on this type of inheritance issue. None of us can offer individualized advice without knowing more about your situation, because rules around inheritance claims are nuanced. But I hope this offers you a few steps you can try to find the closure you’re seeking.
Financial planner Stephen J. Landersman says that typically, “non-minor children are not eligible to continue a parent’s SSI benefit; only a spouse can do that,” though you should be able to claim a $225 death benefit.
However, you might have another option.
You can officially request to claim your father’s Social Security benefits by filing a substitution of party, says Amanda McDonald, founder of Unbound Disability Claims, an Orlando-based company that helps folks claim Social Security Disability benefits. A substitute party must be a surviving family member who can stand in for the original claimant.
You can file that request using form HA-539, Notice Regarding Substitution of Party Upon Death of Claimant, which you can find at ssa.gov or through your local Social Security office.
Regarding the retirement funds, you should have a claim to them if you were listed as the beneficiary (that’s the whole purpose of that role). The account shouldn’t have to go through the probate process if a beneficiary is listed. But if there’s a problem with the account and you’re not showing up as the beneficiary, you’ll need to work with a probate lawyer who can guide you through the official process of transferring ownership.
Follow trends affecting the local economy
Subscribe to our free Business by the Bay newsletter
You’re all signed up!
Want more of our free, weekly newsletters in your inbox? Let’s get started.Explore all your options
If you don’t have one already, here are a few places you can look for a lawyer who can help you, depending on your available resources:
- Local bar associations in your city or region.
- Online directories, including Avvo, FindLaw or Justia.
- Nonprofit legal aid organizations, which might provide legal assistance for free or at a low cost.
Once you do claim the retirement funds, Landersman notes, you have to withdraw the money in a relatively short period; you won’t get a lifetime benefit. “Non-spouse beneficiaries will be required to either take a full distribution and pay the applicable tax or transfer the retirement account into a beneficiary IRA and will have up to 10 years to fully distribute and pay the taxes on everything in the account or face a significant penalty on what is left.”
Landersman is referring to income tax you pay on distributions from a retirement account. If you take a full distribution (take all of the money in the account as cash now), you could face a steep tax bill next April, which you can pay through a monthly payment plan with the IRS. The special IRA would let you spread out the tax obligation.
Dana Miranda is a Certified Educator in Personal Finance® and contributor to The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.