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Does an ABLE Act account make sense for your child's future?


Kent area parents who have a child with disabilities know how important it is to plan for their child's future. These children will need care their entire lives, and parents need to consider how their vulnerable children will be taken care of when the parents die. There are several different ways parents can plan ahead, including a relatively new option that has become available.

In 2014, President Obama signed into law, the Achieving a Better Life Experience Act. This law allows people with qualified disabilities to create a tax free savings account. The account holder can save up to $100,000 without it impacting the benefits they receive from SSI or Medicaid. If the account has more than $100,000, the person will no longer receive SSI but can still be eligible for Medicaid. The interest earned on the savings is tax free but contributions made to the account are not tax free. Contributions are limited to $14,000 each year. When the account beneficiary dies, the money left in the account must first be used to repay Medicaid expenses.

An ABLE account is a tool that a family can use to plan for their disabled child's future. There are other options that should be explored as well, including a special needs trust. A special needs trust does not have a payback requirement or a maximum amount stipulation.

Families who have children with special needs may want to discuss their options with a legal professional skilled in estate planning. An attorney has the skills necessary to discuss the guardianship options and financial options for the child's future. They understand that being prepared for death or incapacity is important.

Source: nj1015.com, "Special accounts for the disabled," Karin Price Mueller, July 1, 2016

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