Families with children with special needs often have to make extraordinary efforts in their estate plans to make sure that the children are still cared for after the parents pass away. The ABLE Act makes that less necessary.
Everyone who has a child with special needs knows that it takes a lot more money to care for the child. And it certainly takes much more than is covered by monthly Supplemental Security Insurance payments.
This has long created an issue for these parents as they worry about what will happen to their child if the parents pass away.
Parents could not just leave money to the child in their estate plans because that could make the child ineligible to receive SSI. Instead, special needs trusts had to be created by the parents. These were often less than ideal as they could only be created by a parent and required a trustee other than the disabled person to handle the money.
The Achieving a Better Life Experience Act seeks to make things easier.
Recently, the Centre Daily Times reviewed the basics of the Act in "Elder law: Understanding the ABLE Act."
These specifics include:
- A person who became disabled prior to the age of 26 can create and maintain the account for him or herself.
- Funds in the account are not used to determine SSI eligibility as long as they are less than $100,000.
- Account income is not subject to income tax.
- Funds must be used for qualified disability expenses.
- When the account holder passes away, account assets must be used to pay back the government for benefits received unless they are rolled over into the account of a family member who is also disabled.
It is advisable that families still consult with an estate planning attorney to learn about the restrictions on ABLE accounts and whether a special needs trust would still be better for their family situations.
Reference: Centre Daily Times (Jan. 9, 2016) "Elder law: Understanding the ABLE Act."
For more information, order a free copy of our report The 7 Biggest Mistakes People Make in Their Estate Plan by clicking the link. You can also register for a free estate planning workshop by calling us at 256-237-3339 or visiting www.AnnistonEstatePlanning.com.