Livens & Reed, PLLC

ABLE accounts may be a better option than inheritance trusts

Making long-term financial arrangements for a disabled family member may get easier. Until recently, people with disabilities could only own $2000 in assets to continue to receive state and federal assistance. The Achieving a Better Life Experience Act was created in 2015 to allow states, such as Texas, to launch tax-advantaged savings programs for disabled individuals. An ABLE Savings Account differs from a Special Needs Trust, which has a minimum contribution of $10,000. In most states, ABLE accounts can be started with just $25 and may be a better option than inheritance trusts.

State and federal benefits such as Supplemental Nutrition Assistance Program, Medicaid and Supplemental Security Income would be jeopardized if assets exceeded $2,000. No longer will disabled people be forced to live poor to keep their benefits. Under the new ABLE Act, individuals with disabilities can have assets up to $100,000 before it affects their resource limit for SSI.

ABLE accounts are shielded from scrutiny when determining eligibility for SSI; the account allows for flexible growth and balances grow tax-free. Some states also protect balances from inheritance tax, Medicaid repayment and student financial aid decisions. Money in an ABLE account must be used for qualified expenses such as medical costs, job-related training, transportation and education.

By creating ABLE Savings Accounts, disabled individuals are relieved of the many burdens associated with disability management. These accounts can provide long-term care and financial security for loved ones who are disabled. For residents of Texas and elsewhere, consulting with an attorney who is experienced in inheritance trusts can determine if an ABLE account is a right choice for their situation.

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