TEN THINGS TO KNOW ABOUT GIFTING TO INDIVIDUALS WITH DISABILITIES

1. What Constitutes a Gift.  A gift is a transfer of assets to an individual where the giver does not receive full value in return.  If a giver makes a gift and receives something in return but less than the full value of the gift, the difference is legally considered a gift.
2. Typical Types of Gifts.  Almost anything of value can be considered a gift.  This would include:
   1. Cash, checks, or wire transfers
   1. Physical property such as real estate, vehicles, or artwork
   1. Intangible stocks, cryptocurrency, or business interests
   1. Selling an item for less than fair market value
   1. Forgiving a debt or making an interest-free loan
3. Taxation. If gifts exceed the annual exclusion exemption or the lifetime exclusion, the gifts are taxable.  For 2026, the annual exclusion exemption is $19,000 per recipient or $38,000 when the donor is married.  There are certain exceptions such as:
   1. Gifts to Spouse, if the spouse is a U.S. citizen
   1. Gifts to be used for medical or education
   1. Gifts to qualified political organizations or recognized charities

The recipient does not pay income tax on the amount received.  Tax responsibility rests with the donor.

• Public Benefits.  There are many types of public benefits.  Some consider income and assets, and some do not.  Common public benefits that do consider income and assets include:
  • Supplemental Security Income (SSI)
  • Medicaid
  • Housing Choice Voucher (Section 8)
  • Supplemental Nutrition Assistance Program (SNAP)
  • Low Income Home Energy Assistance Program (LIHEAP)
  • Children’s Health Insurance Program (CHIP)
  • Disabled Adult Children (DAC)
  • Group Homes
  • Temporary Assistance to Needy Families (TANF)
  • New Jersey Division of Developmental Disabilities (DDD)

Programs that do not consider income and assets include the following:

• Social Security Disability Insurance (SSDI)
  • Medicare

Many public benefits require that the recipient be disabled.  Other programs do not.

• Income and Assets.  Programs vary with respect to counting income.  Some programs count earned income, some count unearned income, and some count both.  Some programs count assets of the individual and others do not.
• Disability.  The Social Security Administration (SSA) definition of disability is: “a severe physical or mental impairment that prevents an individual from doing any substantial work and is expected to last for at least 12 continuous months or result in death.”  Most programs use the SSA’s definition of disability to determine eligibility.  Many programs require a Determination of Disability by the SSA.  Some require only a Certification from a physician.
• Amount of Gift.  The amount of the gift may or may not be important.  If programs have asset tests, the gift would constitute an additional asset.  If the program has an income test, the gift would be considered unearned income.
• Coordination.  It is important to coordinate with other potential donors with respect to gifting.  This is particularly true around holidays and birthdays.  The amount of all gifts from all donors are aggregated for income and asset purposes.
• Non-Countable Gifts.  Certain assets are non-countable for most public benefits.  Gifts of these assets would not affect the receipt of public benefits.  For example, the following are non-countable:
  • A TV
  • Clothing
  • Electronics
  • A Vehicle
  • Payments for services or directly to third parties
• Gifts to Third Party.  A donor may make a gift to a Third-Party Special Needs Trust for the benefit of the intended recipient.  Funds in the Trust are generally non-countable for public benefit purposes.  Gifts to an ABLE account are non-countable, but there are a considerable number of restrictions.