ABLE Accounts Act
By Shana Siegel, CELA*
New federal legislation has been introduced which would expand the use of special needs trusts and allow families with a disabled child to save tax-free for disability-related expenses. The Achieving a Better Life Experience (ABLE) Act of 2011 (H.R.3423) combines the idea of a tax free vehicle similar to 529 savings plans with special needs trusts.
Under current law, disabled individuals under 65 or their families can put aside funds in a special needs trust for the supplemental needs of a disabled child without impacting their eligibility for Medicaid and other government benefits. However, there are no tax incentive for funding special needs trusts similar to 529 plans currently. The new law would essentially exempt these new accounts from all income tax, including contributions and distributions. The legislation would also expand the needs which can be funded through trusts. Under current law, if assets held in a special needs trust are used for food and housing for the disabled individual, it can affect the government benefits they receive. Under the ABLE Act, trust assets can be used for education, housing, transportation, employment support, health and wellness, assistive technology, personal support services and life necessities. In 2009, similar legislation was introduced without success. However, disability groups are gearing up to advocate for passage this year.
Shana Siegel, Esq., CELA, is a certified elder law attorney and focuses her practice on representing seniors and persons with special needs and their families in connection with asset preservation, estate planning, supplemental needs trusts, planning for disability, and guardianships. Ms. Siegel has been involved in health and long term care issues for over twenty years, with a New Jersey practice dedicated to elder law and special needs for the last seven years.
