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Are You ABLE Account Ready?

Do you have a loved one with disabilities?  If so, do you wonder what the smartest way is to save money for them and to provide for them in the future? If so, keep reading to learn whether an ABLE account is a way to go rather than a traditional special needs trust.
The Achieving a Better Life Experience Act, better known as the “ABLE” Act is perhaps the most important law passed by Congress since the passage of the Americans with Disabilities Act in 1990.
But the question remains: What is the best option? 
As a parent, should I set aside money for my child with disabilities by using an ABLE account or a Third Party Special Needs Trust?
The answer isn’t an easy one.  There are rules and guidelines that must be followed, but generally speaking, if your child became disabled prior to turning 26, then an ABLE account might be considered, but only if the account is small.
There is very little point to establishing an ABLE account that has a significant amount of money.
There are two primary advantages to an ABLE account, however:
  • The income builds up tax-free, and
  • The cost of establishing and administering the account is relatively small.
The disadvantage is that on the death of the beneficiary any funds remaining in the account must first go to repay Medicaid for any medical assistance paid during the beneficiary’s lifetime.
The difference between the ABLE account and a 3rd Party Supplemental Special Needs Trust is that there will be costs to establish and administer the trust.  But there’s no Medicaid payback on the beneficiary’s death.
Once an ABLE account reaches $100,000, the beneficiary’s Supplemental Security Income or (“SSI”) is suspended.  If the funds are in the Third-Party Trust, SSI remains in effect.  Between the benefit of the SSI payment and the advantage of no Medicaid payback, the cost of establishing and administering the trust probably makes the most sense.
If you have questions about what planning strategy makes the most sense for your loved one with disabilities, give me a call to schedule your free consultation and allow me to ensure that your child doesn’t lose the benefits that they deserve.
If you have questions or would like to schedule a meeting to discuss this topic more, call me at 724-203-0163 or email me at michele@contilawllc.com