There has been much discussion about the recent legislation involving the Achieving a Better Life Experience (ABLE) Act. For a discussion of ABLE accounts, please scroll down to read about the ABLE Act.
ABLE accounts are an incredible resource for persons with a disability. ABLE accounts are a great tool to use in conjunction with special needs trusts. However, ABLE accounts are not always a replacement for special needs trusts. Each person has his or her own individual needs and that person’s situation needs to be assessed to determine what will work best for the person with special needs and his or her family.
This chart is here to assist you in understanding the important differences between an ABLE account and a third party special needs trust.
You can view and print this chart here: ABLE Account compared with SNT (edited March 2017)
|Issues||ABLE Account||Third Party Special Needs Trust|
|Who can use?||Only persons disabled before age 26||Any person with a disability|
|Who can fund?||Anyone, including person with a disability||
Anyone, including person with a disability IF (s)he has capacity
|How many can person have?||One||Unlimited|
|Who can control?||Person with a disability and likely their legal guardian, conservator, or agent||Anyone except the person with a disability and their spouse|
|Who inherits on death of person with disability?||Medi-Cal must be repaid for amounts paid by Medi-Cal after the creation of the ABLE account; then can go to heirs||Person with a disability’s heirs or whomever is named in document|
|How much can be funded in a year?||$14,000 (or annual gift exemption)||Unlimited|
|Is funding gift-tax free?||Yes||No, but no gift tax will be paid until the donor has given more than $5 million (indexed to inflation)|
|Is there a cap on how much can be in account?||Yes, currently $100,000 limitation for SSI recipients and up to State 529-plan limitations ($475,000 in CA)||No|
|How is income taxed?||No income tax||Taxed as a non-grantor trust at highest marginal tax rate|
|What type of distributions can be made?||Distributions can be made for “qualified disability expenses” such as housing transportation, assistive technology and more||No limitation, except for certain disbursements, such as for housing, may reduce or eliminate SSI or Medi-Cal eligibility|