What Separates ABLE Accounts From Special Needs Trusts?

Estate planning is difficult, but for loved ones with special needs, the process can be particularly challenging. Besides worrying about the type of care your loved one will receive, you are likely overwhelmed with many other questions including who will manage finances and whether the person will be able to receive benefits without being disqualified from receiving government assistance. Fortunately, there a variety of strategies to protect your loved one including ABLE accounts and special needs trust. While it can be tempting to view these two accounts as similar, there are some substantial differences between the two.


The Role of ABLE Accounts


Relative newcomers on the estate planning scene, ABLE accounts allow individuals with disabilities a way to save some assets without interfering with eligibility with government assistance programs like Medicaid and Supplemental Security Income. A person is permitted to have only one ABLE account and if assets in the account exceed $100,000, this excess will count towards that individual’s $2,000 resources limit for SSI eligibility. 


ABLE accounts can be managed by a disabled person, or if that individual is unable to do so by a conservator, guardian, parent, or other trusted agent. Most often, assets in an ABLE account are utilized for the beneficiary’s “qualified disability expenses”, which might include daily living expenses, health care costs, or personal support service charges. 


If a person passes away both receiving Medicaid benefits and assets in an ABLE account, Medicaid might reimburse the assets in the account even if the assets were contributed by a third party.


The Option of Special Needs Trusts


Much like ABLE accounts, special needs trusts can be created by the special needs person, parents, grandparents, or other appointed agents. If these trusts are created by the special needs individual they are referred to as first-party trusts, but if these trusts are created by anyone else they are referred to as third party special needs trusts.


In contrast to ABLE accounts, a person can be a beneficiary of multiple special needs trusts. There are also no restrictions on the amount that these assets can hold. Funds from these trusts can be used for anything other than food or housing. Disbursements from these trusts also do not place the special needs individual at risk of becoming disqualified for government benefits. 


Also similar to ABLE accounts, assets that are placed in a first-party special needs trust can be subject to Medicaid reimbursement. Assets that are placed in a third-party special needs trust, however, cannot be collected by creditors after a person’s death.


Contact a Seasoned Estate Planning Lawyer


Given these issues, the decision to select an ABLE account or special needs trust depends on your circumstances. You might even decide to utilize an ABLE account as a supplement to a special needs trust. To learn more about how these options can be implemented into your loved one’s estate plan, it can help to speak with an experienced estate planning lawyer. Contact Ettinger Estate Planning today for assistance.

Contact Information