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Friday, June 22, 2018

ABLE accounts - a savings tool for people with disabilities

Many of our clients have loved ones with special needs.  We recommend certain specialized estate planning tools, including Special Needs Trusts and pooled trusts, to help our clients set aside money to ensure that their disabled loved ones will have financial support throughout their lifetimes.  Another helpful resource for disability planning is an ABLE account, named after the Achieving a Better Life Experience (ABLE) Act of 2014, which allowed the creation of these tax-advantaged savings plans. 

Many people with disabilities rely upon needs-based public benefits such as Supplemental Security Income (SSI) and Medicaid to meet their day-to-day needs.  To qualify for these programs, a recipient cannot typically have more than $2,000 in countable resources.  These rules could make it difficult, if not impossible, for recipients to save money for school, a down payment on a home, or retirement. 

ABLE accounts were created to help disabled people who are reliant on programs like SSI and Medicaid to save money without jeopardizing their eligibility for benefits.  With an ABLE account, an individual can save up to $15,000 per year and keep an account balance of up to $100,000, and the account will not count against the resource limit for SSI or Medicaid.  The money in the ABLE account can be used by the individual for a broad range of qualified disability expenses, including education, housing, transportation, assistive technology, and health and wellness. 

To be eligible to open an ABLE account, an individual must be able to show the following:

  • That he or she meets Social Security’s definition of disability or blindness
  • That his or her disability that began before age 26

ABLE accounts are administered through state programs.  Indiana has its own plan, called INvestABLE Indiana.  Individuals are not required to open an account in their home state, but each individual may only have one ABLE account.

Living with disability is challenging – both for the person with the diagnosis and for the people who care for him or her.  Just getting through the day can be an accomplishment in itself, so planning for the future is all the more daunting.  At Severns & Howard, we can work with you to create a plan for life-long financial stability for your disabled loved ones.



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