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The New ABLE Act: Is It Right for You and Your Family?

Monday December 15, 2014, Congress passed the ABLE Act. The goal of the ABLE (Achieving Better Life Experience) Act is to provide funding for qualified disability expenses for individuals while allowing them to receive SSI and/or Medicaid assistance, employment and money from other sources. The ABLE Act provides an account to hold assets up to $100,000.00 as an alternative to a special needs trust or a pooled trust.

In order to qualify an ABLE account the following requirements must be met:

The disability must have occurred prior to age 26

  1. Only the first $100,000.00 is protected
  2. Contributions to the ABLE account must be in cash and are limited to $14,000.00 per year
  3. The participant receiving the benefit of the ABLE account must be a resident of the state where the account is established
  4. Only one (1) account is permitted per participant
  5. The ABLE account must be set up and managed by the state or agency

Some of the benefits of establishing an ABLE account include:

  • the account is exempt from taxation
  • the person with the disability may direct how the funds are invested a maximum of 2 times a year.
  • the money can be used for:
    • education
    • housing
    • transportation
    • employment training support
    • assistive technology
    • administrative
    • legal expenses
    • funeral arrangements
  • it may be beneficial when family members would like to make a gift (while alive) and the amount would not justify the expense of establishing and administering a special needs trust or pooled trust.

Be aware that upon the demise of the participant, the ABLE Act requires any monies remaining are first subject to repayment of the Medicaid lien (just like in a special needs trust and pooled trust).

We are waiting for the President to sign the bill into law. After it is signed by the President, we must wait to see what Florida’s government does:

  • will it establish an ABLE trust?
  • what agency will be assigned to administer the ABLE accounts and prepare financial accountings for each account?

Stay tuned for further updates in 2015.  If you would like to learn more about special needs planning please call my office to schedule a consultation.  We invite you to print out the gift certificate on my website and mention it when scheduling your appointment.

Let Us Be Your Trusted Planning Advisor Through Life.