How the ABLE Account Helped a Client

Passed by the Federal Government with overwhelming bipartisan support in December of 2014, the “Achieving a Better Life Experience Act,” or ABLE Act, was a landmark bill that will affect how disabled individuals and their families manage finances.  In summary, the ABLE Account can currently have yearly contributions of up to $15,000.00 which grows tax free and the assets in the account will not be counted as a resource when qualifying or continuing to be eligible for other government benefits (accounts up to $100,000 are not considered in determining eligibility for SSI).  The ABLE accounts have been compared to and are modeled after 529 education savings accounts. Each state has to have their own legislation regarding ABLE accounts and Pennsylvania’s legislation was signed by Governor Wolf in 2016.  The individual setting up an ABLE account might also be receiving Social Security Benefits or SSI benefits and the Social Security POMS have their own rules and regulations.

How the ABLE Account Helped a Client

We have heard from some clients who, after learning about the ABLE Accounts, are frustrated that it doesn’t exactly solve the problem they are having.  Most likely, there is still a need for special needs trust to be involved in the planning for the family member. However, an ABLE account is worth considering because we have discovered ways in which it solves some problems for our clients.  Here is an example of a client for whom an ABLE account was very helpful:

Our client (let’s call her Judy) was working at Wawa and making a nice income but not enough to provide for her daily living.  As she was disabled, she received social security benefits that helped support her. However, the social security benefit she was receiving was limiting how much money she could have in her name.  If she kept working and saved money in her account, it would jeopardize the benefits she desperately needed. In years past, Judy would either have had to stop working or utilize a payback special needs trust.  But an ABLE account provided a much simpler and easier solution. Judy and her mom went online and set up an ABLE account and now she saves up her money in the ABLE account. She can use the money she has saved in the ABLE account for “qualified expenses,” which have been defined as any expenses related to the eligible individual’s blindness or disability which are made for the benefit of an eligible individual, including the following expenses: education, housing, transportation, employment training and support, assistive technology and personal support services, health prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and any other expenses approved by IRS.  The account does not count as a resource for her eligibility for benefits and she can keep working (which she loves).

Another new advantage is that you can deduct PA ABLE contributions up to $15,000 per year from Pennsylvania taxable income (only contributions to PA ABLE accounts qualify for this tax deduction).  Also, account owners can roll over 529 college savings accounts to ABLE accounts, up to the ABLE annual contribution limit ($15,000 in 2018).

You can sign up for a Pennsylvania ABLE Account here.  

Contact Our Pennsylvania Special Needs Trusts Attorneys Today

If you have any questions about whether an ABLE account would help in your situation or whether it would solve an issue you are dealing with, then please reach out to us!  The Pennsylvania special needs trust attorneys at Herr Potts & Potts help with estate planning for individuals with special needs and their families.  For help with your matter and to schedule a consultation, contact our law offices today at (610) 254-0114.