ABLE Accounts Can Help Protect Vital Government Benefits

People with disabilities have a unique problem, when it comes to estate planning and planning for their future.

On the one hand, like anybody else, they want to plan for their future—in fact, because of the potentially increased need for health care, assistance, or assisted living, they may have an even greater need to plan for their future.

On the other hand, they may be reliant on government assistance and a number of government programs. These programs are often income and asset based, meaning ironically, the more that disabled people or their families plan for the future, they actually could be making that future worse, as the more assets and money they accumulate, the more they risk losing these vital government benefits.

The ABLE Act to the Rescue

But in 2014, that all changed, with a federal law called the ABLE act, and in 2015, California followed suit, with the CalABLE Act.

Both of these plans allowed qualifying individuals to open savings accounts, without fear that what is put into those savings will jeopardize precious government benefits.

To be eligible, the disabled individual must be disabled as defined by the Social Security office, and be entitled to receive disability benefits. Alternatively, someone can have a disability form or certificate signed by a physician.

Even better than the fact that money in these accounts won’t disqualify people from government benefits, is the fact that money put into the accounts is tax free, and even withdrawing them will have no tax consequences, so long as they are used for expenses related to the disability.

That doesn’t just include medical expenses either. It can include using the money for medical devices, housing, job training, legal fees, cars and transportation and needed modifications to vehicles, rehabilitation, or financial management professionals and services.

Some Limitations

The ABLE accounts aren’t foolproof; they have a maximum yearly limit of $17,000. Additionally, the disability related to the account must have occurred or manifested, before the disabled person turned 26. And if you use money from an ABLE account for expenses unrelated to the disability, that income could be used to possibly disqualify you from things like Medicaid or other benefits.

Using ABLE Accounts in Estate Planning

You can use an ABLE account as part of an estate plan, to help care for and plan for a disabled family member after you are gone. It can help you ensure that a disabled family member gets the resources and help that he or she needs long into the future.

One of Many Options

There are other vehicles that you can use to accomplish the same purpose, such as health savings accounts or special needs trusts. But with all of these vehicles, including an ABLE account, a family can ensure the care needed for loved ones, and also ensure that the disabled loved one won’t lose the benefits that he or she needs.

Let us help you plan for your, and your family’s future in your estate plan. Call the Torrance will and estate attorneys at Samuel Ford Law today.

Sources:

calable.ca.gov/

dds.ca.gov/consumers/cal-able/