Home » Financial Planning » Do I Need a Special Needs Trust With an ABLE Account?

Do I Need a Special Needs Trust With an ABLE Account?

December 9, 2020


Question: “I created a Special Needs Trust several years ago, but now my son has an ABLE account. Do I still need a Special Needs Trust?”

Do I Need a Special Needs Trust With an ABLE Account?

I have been asked this question quite often since the ABLE accounts were passed into law and became available. The quick answer is, “Absolutely, you still need a Special Needs Trust.”

However, there are several reasons why you more than likely want to have a Special Needs Trust AND an ABLE account.

The ABLE account is a great account for any money that is earned by your child or comes as small gifts like birthday or holiday money. The reason I use the word “small” is because the ABLE account comes with an annual funding limit, and in 2020 that funding limit is $15,000.

This annual funding limit does not allow the ABLE account to be the receptacle for larger sums of money, such as life insurance proceeds or the equity proceeds from the sale of a house when a parent passes away, which means the Special Needs Trust you created still has a very important role in your planning. The Special Needs Trust does not have any annual funding limit, so it can receive larger lump sums.

There are two other detractors from an ABLE account that a third party Special Needs Trust does not have.

1. When your child’s ABLE account reaches $100,000 in value, his/her SSI (Supplemental Security Income, which is a monthly income most individuals with a diagnosis are eligible for when they turn age 18) will be suspended.

2. At the end of your child’s life, Medicaid has the authority to be “paid back” for the cost of the services they provided your child from the remaining proceeds in the ABLE Account.


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The ABLE account does have the advantage of being much simpler to manage from a tax perspective than a Special Needs Trust, and the money inside the ABLE account can be used for more expenses than the money in a Special Needs Trust.

The ABLE Account is a great tool in special needs planning, but it does not replace the need for a Special Needs Trust. Both accounts are very complimentary and should be used in conjunction with one another to provide for the financial support needs of your child.

This article was featured in Issue 100 – Best Tools And Strategies For Autism

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