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Providing for a disabled family member easier with ABLE Act

Special needs trusts are now not the only way assets can be saved for a disabled beneficiary while allowing the beneficiary to remain eligible for government assistance programs such as Social Security and Medicaid.

Last month, President Obama signed the Achieving a Better Life Experience, or ABLE, Act into law, making it possible for individuals with disabilities to open special accounts where they can save up to $100,000 without the threat of losing eligibility for needs-based assistance programs.

The National Down Syndrome Society said the ABLE Act is the first time Congress has recognized through public policy the extra significant financial burdens individuals with disabilities face. 

An individual must have a disabling condition that occurred before the age of 26 in order to qualify for an ABLE account, and only one account can be opened for the benefit of each individual.

The ABLE accounts are modeled after 529 college savings plans. Interest that is earned on the savings will be tax-free, though contributions to the account are not tax deductible. Friends, family members and the disabled individual can all make contributions to the account.

The total annual contributions into ABLE accounts are limited at $14,000. Once the account is worth more than $100,000, the beneficiary will no longer be eligible for government programs such as SSI that ordinarily have a $2,000 individual resource limit.

The account funds can be used to pay any "qualified disability expense," which includes any expense related to living with a disability such as education, housing, transposition, health care costs, assistive technology, and employment training and support.

While ABLE accounts could begin sometime this year, states first need to create their own ABLE regulations. It is believed that as many as 5.8 million individuals and families could benefit from the ABLE Act.

To find out more about ABLE accounts and other ways of providing for a disabled family member, talk to an experienced estate planning lawyer in your area. 

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