The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Pacheco, California, Special Needs Alliance member Stephen W. Dale of The Dale Law Firm, PC. Steve is a disability rights advocate and attorney dedicated to providing quality estate planning. He is a frequent speaker on a variety of disability related topics across the country. Steve regularly teaches courses to the public, financial professionals, and other attorneys on special needs trusts and trust administration. Additionally, he serves as the trustee for the Golden State Pooled Trust. Steve offers numerous videos and handouts to the public and his colleagues at www.achievingindependence.com.
The first ABLE programs have been launched in 18 states, as of March 1, 2017, and most of them welcome applicants from other states. Since ABLE accounts can be rolled over from one state to another, families throughout the U.S. can now begin exploring their options.
ABLE accounts, which grow tax-free, are one way to set aside funds for disability-related expenses without affecting the beneficiary’s eligibility for means-tested government programs like Supplemental Security Income (SSI) and Medicaid. They are available to individuals who meet the government’s definition of “disability” prior to attaining 26 years of age. At the beneficiary’s death, any remaining funds (whether first-party or third-party) must first be used to reimburse the applicable state’s Medicaid program for covered expenses incurred since the creation of the account.
There are broad similarities among the ABLE programs, but many details differ, as will undoubtedly continue to be the case as additional programs launch. Interested families should carefully research the specifics, bearing in mind that the least expensive alternative may not be the one that best meets their long-term needs. This article addresses the basics of how to establish an ABLE account.
Who Can Open an ABLE Account?
An ABLE account can be opened by an individual with a disability, a parent of such individual, a guardian/conservator of the individual, or an agent designated through the individual’s power of attorney. Regardless of who is responsible for managing the account, it may be advisable to consult a special needs attorney about establishing a power of attorney to avoid interruptions in signature authority during the term of the ABLE account.
How to Sign Up
To date, all of the ABLE programs have an online application process, with additional help available by phone or e-mail. The Nebraska program also provides a hard copy application for mail-in. This form must be used by guardians, conservators or agents designated through a power of attorney, who must supply evidence of their legal authority. Parents of a minor beneficiary can apply online.
So far, Florida is the only state limiting eligibility for its ABLE program to state residents. Other requirements are federally mandated, and applicants are responsible for self-certifying that they meet them. In addition to having a disability with an onset date prior to the age of 26, the beneficiary must meet one of the following conditions:
Applicants are not required to forward the physician’s certification to the state program but must be prepared to supply it if requested. Applicants will, however, need to provide the diagnosing doctor’s name, address and date of diagnosis.
Florida offers an online Eligibility Wizard, Ohio has an “eligibility quiz” and Tennessee has an interactive guide to help families determine whether or not a person qualifies to open an ABLE account.
Other Information Needed
The following information is also required concerning the beneficiary of an ABLE account:
If the account is being opened by someone other than the individual with a disability, the account opener’s personal information will also be needed.
For those who wish to transfer funds electronically (if this option is available), bank account and routing numbers must also be supplied.
Deposits to an ABLE account can be made by anyone, subject to federally determined limits. Beneficiaries can have no more than one ABLE account, and total annual contributions from all sources cannot exceed $14,000, a number that is keyed to the federal annual gift tax exclusion under § 2503(b) of the Internal Revenue Code. If a beneficiary receives SSI and has an ABLE account balance which grows to exceed $100,000, the beneficiary’s SSI will be suspended until the account balance falls below $100,000. For beneficiaries who do not receive SSI, each state is able to set the account upper limit before the beneficiary’s Medicaid eligibility will be affected. Here are some examples of state-specific differences:
All states offer a variety of investment choices, ranging from conservative to aggressive. For example:
States set their own fees. For example:
Each state has specific rules regarding the management of ABLE accounts. The following are examples of state-specific rules regarding withdrawals from an ABLE account:
The launch of additional state ABLE plans in the coming months is anticipated. For up-to-date information, check out the ABLE National Resource Center at http://www.ablenrc.org/about/what-are-able-accounts, or a similar resource maintained by The Arc at http://www.thearc.org/what-we-do/public-policy/issues/able-program-implementation. States will undoubtedly learn from each other’s experiences, and the best available option for a person with special needs is likely to be a moving target. As always, it is important to consult with a competent special needs attorney to help families understand the benefits and drawbacks of the various ABLE programs, as well as other tools that should be considered to help secure the future of the beneficiary.
About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online.
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