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How Can I Use an ABLE Account for My Special Needs Child?

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Anyone can contribute to a person’s ABLE account, but there are federally-mandated annual contribution limits. In 2019, the total annual contributions that an ABLE account can receive from all sources is $15,000.

For those with special needs and/or their caretakers, securing a financial future is essential. The Achieving a Better Life Experience (ABLE) Act lets qualified individuals and/or their families start an ABLE savings account, without impacting their eligibility for needs-based public benefits programs, like Supplemental Security Income (SSI) and Medicaid.

The Legal Examiner’s recent article, “The ABCs of ABLE Accounts” says that, when the ABLE Act passed, individuals with more than $2,000 in assets weren’t eligible for those benefits.

For those people who got a personal injury lawsuit or received another lump sum of money like an inheritance, this rule was an issue. Some individuals used a special needs trust, a pooled trust, an ABLE account, or another solution to be sure they would comply with the programs’ rules. Many of these choices come with tax advantages.

With an ABLE account, beneficiaries and their families have more choices and control over the account. The cost of establishing an ABLE account most likely will also be less than that of a trust. Determining which option is best, depends on an individual’s unique circumstances.

An ABLE account can pay for qualified disability expenses (QDEs), which are related to the blindness or disability of the beneficiary. A QDE includes (but is not limited to) expenses for things like education, housing, transportation, employment training and support, assistive technology and related services, prevention and wellness.

When a beneficiary with an ABLE account dies, any funds still in the account will be used to finish paying all outstanding QDEs and may then reimburse the state for Medicaid benefits that he or she received.

To be eligible for an ABLE account, a person must be eligible for SSI based on disability or blindness that began before age 26; must be entitled to disability insurance benefits, childhood disability benefits, or disabled widow’s or widower’s benefits based on disability or blindness that began before age 26; or must certify that there is an impairment meeting the specified criteria or is blind, and the disability or blindness must have occurred before age 26.

A person with “signature authority” can also establish and administer an ABLE account for a beneficiary who is a minor or an adult who is incapable of managing the account. The individual with signature authority must be a parent, legal guardian, or someone acting under power of attorney.

An elder law attorney can help with the application process and make certain that all the right steps are taken in the beneficiary’s best interest.

Reference: The Legal Examiner (February 11, 2019) “The ABCs of ABLE Accounts”