ABLE Accounts

• Feb 03, 2023

Have you wondered if an ABLE account is right for you or your loved one but need more information? We at Falcon Law Group serve NJ residents and are here to help with special needs and mental health planning. Here are some of the most asked questions about the ABLE fund and special needs lawyers.

What Are ABLE Accounts?

So, what is an ABLE account? An ABLE account is created to benefit disabled people without them losing available public funds. Completed Dec. 19, 2014, by the Achieving a Better Life Experience Act (ABLE Act), it can be a simple alternative to the SNT (Special Needs Trust) that is tax-advantaged, where the disabled person is the owner and the beneficiary of the account.

Eligibility for an ABLE Account

The person must be diagnosed as disabled prior to 26 years of age to be eligible. Without a doctor-confirmed diagnosis before that age, you’ll need a certificate that supports the disability, such as medical records and documents. You’ll also need to have a disability that results in functionality limitations for over 12 months and meets the SSDI/SSI requirements for disability.

Requirements for an ABLE Account

Some essential requirements must be adhered to when having an ABLE account. These include:

• If qualified, a person can have only one account at a time. The disabled person, or beneficiary, is the account owner. While other people can be power of attorney on the account, the disabled person will always be the owner and beneficiary of the account.
• The person should have a social security number, as opening an account is difficult without one.
• The most you can contribute in a year is capped at the maximum annual federal gift tax exemption (unless the owner of the ABLE account is working). This amount may change yearly, so it is vital to know the current exemption amount to avoid over-contributing the fund.
• The total value of the account must not go over the state limit for a 529A account. This amount may change yearly, so it is essential to check each year for the new rate.
• Anyone can contribute to an ABLE account on behalf of the disabled person, from family members to friends to even strangers. The donations to the fund are a gift.

Where Can You Use Your ABLE Account?

Funds from an ABLE account can be used on qualified disability expenses. These related costs maintain or improve the quality of life defined by the SSA.

Some things that qualify are education, transportation and housing, funeral and burial expenses, support services, financial and legal management, and assistive technology. Funds from an ABLE account that are seen as non-qualified buys will get a 10% income tax penalty and may alter the recipient’s federal means-tested benefit eligibility.

SSI and Medicaid Eligibility and the ABLE Fund

While we’ve stated that the total value of an ABLE account may not go over the state maximum for any 529A account, there is another caveat that you will need to understand. That ABLE account value threshold means that if the account value exceeds that dollar amount, the owner and beneficiary of the fund will have its SSI cash benefit suspended unless the limit goes back to the limit. Meanwhile, they will still receive the basic Medicaid services to live independently.

With this, make sure that you have special needs lawyers that can periodically look over your account and ensure you are not going to lose crucial benefits, all while maximizing your fund to boost your quality of life.

When Would You Need Special Needs Lawyers in NJ and How They Can Help?

Special needs lawyers in NJ can certainly help with the ABLE fund. They can help you navigate the requirements and help you set up the account and disbursements from the account. Knowing what should and should not be done with the account can help you avoid potential pitfalls.

If you are looking for special needs lawyers, we at Falcon Law Group are here to help. Give us a call for a consultation for more information about ABLE accounts and other benefits you may be entitled to.