Is An ABLE Account the Same as Special Needs Trust?

Home » Blog » Is An ABLE Account the Same as Special Needs Trust?
Posted on: August 23, 2022 | by: Graber & Johnson Law Group, LLC
Because of astronomical costs of care and support—often more than $100,000 per year—most individuals with disabilities will need government assistance, such as Supplemental Security Income and Medicaid.

Many families help their disabled loved ones with whatever resources they have, if they can, but this must be done carefully to protect eligibility for government aid, reports a recent article titled “Here’s how ABLE accounts, special needs trust differ…and how they can work together” from CNBC. An ABLE account—named for the Achieving a Better Life Experience Act—can be paired with Special Needs Trusts to improve the quality of life for the disabled family member.

How do Special Needs Trusts work?

The two types of Special Needs Trusts are known as Third-Party and First Party trusts. The Third-Party Trust is funded by parents or others and is only for the disabled person’s needs. A First Party Trust is created with the disabled individual’s own funds and is used to shelter any income, earned or inherited, to maintain their eligibility for Medicaid, which has both income and asset limits. Any distributions from the First Party Trust must be approved by the trustee. After the death of the disabled individual, Medicaid will make a claim on any funds in the First Party Trust.

Special Needs Trusts (SNTs) may not be used for certain expenses paid for by government programs, including groceries, medical expenses covered by Medicaid and housing expenses, which are covered by Supplemental Security Income (SSI).

Expenses not covered by government programs can be paid from ABLE Accounts. The ABLE account is a tax-advantaged saving account similar to the 529 accounts used for college savings. Funds may be used for expenses that maintain or improve the individual’s health, independence, or quality of life. Funds can be used for education, recreation, personal technology and more.

Medicaid can "claw back" funds from the ABLE account after the death of the recipient.

There are requirements and limitations to the ABLE account. In 2022, only $16,000 may be contributed per year. Most parents leave more than this amount for their disabled children, so a different vehicle is needed for inheritance.

Here’s where it gets interesting: A trustee for a SNT can make a distribution to the ABLE account to help cover expenses not permitted to be paid from the Trust.

An estate planning attorney can help the family plan for the present and the future to use these and other strategic planning tools for a disabled individual.

Reference: CNBC (June 30, 2022) “Here’s how ABLE accounts, special needs trust differ…and how they can work together”

Read Our Blog

Estate Planning Articles

Our daily blog discusses issues pertaining to Estate Planning, Probate Administration, Special Needs Planning, and Elder Law / Medicaid.
Read Our Blog

Join Our eNewsletter

Join Our eNewsletter

Each month we send an e-newsletter covering issues of Estate Planning. We also have subscriptions available for our bi-monthly Elder Law e-newsletter and weekly Business Planning e-newsletter.
Subscribe Now!

Request an Initial Consultation

Schedule a Time to Meet Our Team Today

Graber & Johnson Law Group, LLC is devoted to serving clients in the highly specialized areas of estate and business planning. Book a time to meet the Graber & Johnson Law Group Kansas Estate Planning Law Firm.
Request a Consultation

Have Questions?

If you have a a question, a comment, or simply want to have a conversation and explore how we can help, we’d love to hear from you.
Request a Consultation Now

Office Locations

Manhattan Office

1300 Fremont St
Manhattan, KS 66502

Directions

Hugoton Office

517 S. Main St.
Hugoton, KS 67951

Directions

Elkhart Office

701 Vilymaca St., PO Box 450
Elkhart, KS 67950

Directions

Hutchinson Office

1515 N. Lorraine St, Suite A,
Hutchinson, KS 67501

Directions

Garden City Office

1501 E Fulton St.
Suite 3
Garden City, KS 67846

Directions

Norton Kansas Office (Appointment Only)

201 E Holme St.
Norton KS 67654

Manhattan Office

1300 Fremont St
Manhattan, KS 66502

Get Directions
Hugoton Office

517 S. Main St.
Hugoton, KS 67951

Get Directions
Elkhart Office

701 Vilymaca St., PO Box 450
Elkhart, KS 67950

Get Directions
Hutchinson Office

1515 N. Lorraine St, Suite A,
Hutchinson, KS 67501

Get Directions
Garden City Office

1501 E Fulton St.
Suite 3
Garden City, KS 67846

Get Directions
Norton Kansas Office (Appointment Only)

201 E Holme St.
Norton KS 67654

Get Directions
Integrity Marketing Solutions - Estate Planning Marketing
Powered by
selectcrosschevron-down