Posted in Estate Planning, John Polgrean
This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.
Many Nashua area families who our firm has helped with their wills, trusts and other estate planning matters over the years, have had questions and concerns about planning for a child or loved one with a disability. A recently enacted Federal Law entitled “Achieving a Better Life Experience (ABLE) Act” is a good starting point for those families. Traditionally, if a disabled person earned more than $600-$700 per month or had assets in excess of approximately $2,000 they risked having to forfeit eligibility for government programs. When properly combined with other appropriate estate planning documents such as powers of attorney and special needs trusts, the ABLE Act has created a way for families and Americans with disabilities to save for the future to supplement private insurance and public benefits for their disabled family member.
The 529A account.
Between doctor visit co-pays, medical equipment, education, therapy and other necessary expenses, the cost of raising a special needs child can easily exceed $1,000,000 to $2,000,000 over the course of a lifetime. The ABLE Act, permits families to save money for future expenses in a tax-deferred 529A account without forfeiting eligibility for public benefits, provided that the funds are spent toward “qualified disability expenses”. 529A accounts are administered by the states, similar to 529 education savings accounts. The annual contribution limit is $14,000 per individual, and total contribution limits vary by state. The first $100,000 saved in the account is exempted from the $2,000 Supplemental Security Income (SSI) limit, and beneficiaries with account values greater than $100,000 will not receive any SSI benefits (but will still be eligible to receive Medicaid).
What is a qualified disability expense?
Funds in a 529A account must be used toward qualified expenses to realize the tax benefits. The money in a 529A plan can be spent over the course of a participant’s lifetime on purchases related to living with a disability. Qualified expenses include education, housing, employment training and support, health care and financial management.
If you or a family member has questions or concerns about estate planning involving an individual with a disability, please contact John S. Polgrean.