The ABLE Act

By: Steve Newbold, Attorney
NewboldLaw-Special Needs Legal Services
snewbold@newboldlaw.com
www.newboldlaw.com
(309) 826-1658 
 
"Securing the Future for Your Loved One"
 
The ABLE Act
 
In March of 2009 the ABLE Act (Achieving a Better Life Experience Act) was introduced in Congress.  The Act would allow individuals with disabilities or their families to set up accounts, similar to 529 Education accounts, to save money for qualifying expenses. This would be the first ever tax-advantaged financial savings vehicle set up specifically for individuals with disabilities.  This would provide considerable flexibility in planning to take care of a child with a disability.
 
Some of the benefits include:
  • either the individual or other family members can set up the account
  • tax free accrual of earnings on the account
  • tax free withdrawal of money for qualifying expenses
  • allows control of the account by either the individual and/or their families
  • assets saved through the accounts would not count against an individual's eligibility for any federal programs like Medicaid or SSI which require an individual not own assets greater than $2,000
  • the list of allowable expenditures is very broad including education, medical and dental, employment training and support, assistive technology, personal support services, transportation, housing, plus other expenses for life's necessities.
  • The accounts should be easy and inexpensive to open
  • The account would be established under Federal law so that every state should operate the same allowing for portability of the account should families move from state to state.
  • Contributions can be made up to $500,000
  • The individual with a disability may qualify for a tax deduction up to $2,000 for contributions to the account.
Funds remaining in the account on the individual's death would be used to "pay-back"  the state Medicaid program up to the value of services provided during the individuals lifetime.  After the pay-back is made, money remaining in the account could be distributed according to the estate plan set up by the individual.
 
ABLE accounts would not necessarily replace Special Needs Trusts and their use use would depend on each family's unique circumstances.  The accounts would be a very welcome additional tool available for many circumstances.  I continue to monitor the bill in hopes it will get moved along and passed this year.  I will keep everyone posted!
 
CERTIFIED FINANCIAL PLANNER ™ News
 
I am pleased to announce that as of May 25, I am now officially a CERTIFIED FINANCIAL PLANNER ™  professional.  This is a symbol of excellence in financial planning. In combination with my legal background and my experience as a parent of a child with a disability, I am in a unique position to assist you with any special needs legal services you require.  Please feel free to contact me for a free consultation regarding any matter of concern to you.