EnABLEd Accounts by Phil Runyon

EnABLEd Accounts

​We've probably all at least heard about so-called "special needs trusts", even if we've never met one in person.  They're intended to provide supplemental assistance for people receiving - or who may be eligible to receive - those special public benefits.  They're also usually long and complicated, because there are lots of rules limiting what the trust funds can be used for without upsetting the public benefit apple cart.  Enter the recently-enacted ABLE account, which is short for Achieving a Better Life Experience, and which, under the right circumstances, can be much more user-friendly than a tedious and restrictive special needs trust.  Here's how:

Let's say a young person with special needs has had a Uniform Transfers to Minors Act account that was set up by a caring parent or grandparent.  If she applies for public benefits after turning 21 (when UTMAs must pay out), those funds will be counted against her in the application process.  If instead those UTMA funds are transferred to an ABLE account before she turns 21, the government authority will be unABLE to count those funds against her in determining her benefits.

OK, but how does an ABLE account work, and who's in charge of it?  That's the beauty part, as they say, because instead of having to work through an independent trustee for every expenditure, the young person can be in charge of the account and can determine the use of his funds.  That may not work for everyone with special needs, but in the right case it can be extremely empowering and can help build a vulnerable person's self-esteem.  The enABLEd person can also use the account to save up for important purposes like buying a home or getting married.

Another ABLE advantage is that the account can be used for the person's own household and living expenses, which would likely be disqualifying expenditures for public assistance purposes if those payments were made from a special needs trust.  Again, if a person with such an account can pay her own way, so to speak, that can result in a feeling of independence and promote a sense of personal responsibility that's unheard of in the special needs trust world.

As I said, an ABLE account may not work for someone with severe needs, but it might be partnered with a traditional special needs trust to provide a person with control over at least a portion of the available funds.  Any degree of self-determination in these difficult situations can be life-changing.

Sure, there are some limitations on ABLE accounts that go beyond a message you may be reading somewhere by the water, but maybe this will plant the seed.

​Posted July 11, 2017 - misc.