ABLE Accounts and Special Needs Trusts - ABLE National Resource Center (2024)

FAQs

What's the difference between a special needs trust and an ABLE account? ›

If you only want to help pay basic living expenses, then you may want to use an ABLE account. If you only want to help pay for “extra” expenses, then you may want to use a special needs trust.

ABLE account funds may be used for qualified disability expenses, or QDEs, which may include any expense related to the beneficiary as a result of living a life with a disability.

ABLE accounts, or Achieving a Better Life Experience accounts, are a valuable resource for eligible individuals with disabilities. These specialized accounts allow people with disabilities to save funds in a tax-free environment, all while maintaining eligibility for important federal benefits.

Withdraw. Withdrawing is simple and flexible. All withdrawals will be considered to be withdrawn to pay for Qualified Disability Expenses.

Cons of Special Needs Trusts

The trust must be maintained, and yearly management costs can be high. Depending on who manages the fund, there may be a minimum amount required to set up the trust. It may be financially difficult for the settlor to actually establish the trust, depending upon their circ*mstances.

The savings in an ABLE account may be used tax-free on a variety of qualified disability expenses (QDE) such as housing, food, transportation, assistive technology and more.

Following the Death of an Account Owner

The executor or administrator of the estate can request funds from the ABLEnow account with the Death Distribution for Estate Form which requires a copy of the death certificate and document appointing the executor or administrator of the deceased account owner's estate.

Can Social Security or SSI benefits be deposited into an ABLE account? Yes. Beneficiaries who receive Social Security or SSI benefits can deposit their benefits into their ABLE accounts.

A: You do not have to pay taxes on any money while it is in your ABLE Account. You also do not have to pay taxes on any money you withdraw from your ABLE Account, as long as you use the money to pay for Qualified Disability Expenses.

Financial management and administrative services, Legal fees. Basic living expenses. Funeral and burial expenses.

Who controls an ABLE account? ›

Consider Tying ABLE Account to an SNT One of the advantages and challenges of ABLE accounts is that, unless the beneficiary lacks legal capacity, they control it upon adulthood, regardless of who established or funded it.

Many benefits programs have resource limits, but: You can have up to $100,000 in your ABLE account and keep getting Supplemental Security Income (SSI) benefits, as long as you meet all other SSI rules.

Several states offer state income tax deductions for in-state residents who make contributions to an ABLE account. Many ABLE programs offer a debit card.

Just log into your account and request a withdrawal amount. The withdrawal can be sent to your bank account, electronically loaded on to your ABLE Visa® Prepaid Card, or you can request a paper check made out to the ALR or beneficiary for a small fee.

Funds in an ABLE account are meant to be used to off-set the costs associated with living with a disability. Funds are meant to assist a person in the purchase of items and services that are covered as QDEs.

ABLE or 529 (A) Accounts are tax-advantaged savings accounts for individuals with disabilities. Eligible individuals and their families will be allowed to establish ABLE savings accounts that will not affect the individual's eligibility for SSI, Medicaid and other means tested public benefits.

A Special Needs Trust (SNT) allows for a disabled person to maintain his or her eligibility for public assistance benefits, despite having assets that would otherwise make the person ineligible for those benefits. There are two types of SNTs: First Party and Third Party funded.

Alternatives to opening a trust include spending down the funds, prepayment of living expenses and ABLE accounts. Read below for more information on each.