An Atlanta Special Needs Attorney’s Take on the ABLE Act and New Savings Opportunities for Disabled Individuals

An Atlanta Special Needs Attorney’s Take on the ABLE Act and New Savings Opportunities for Disabled Individuals

Atlanta Special Needs Attorney

Thanks to a new law passed in Congress last month, disabled individuals will no longer have to choose between saving a small nest-egg for future care expenses or preserving long-term eligibility for low-income benefits such as Medicaid or Supplemental Social Security Insurance (SSI).

Under the Achieving a Better Life Experience (ABLE) Act, individuals with disabilities now have the opportunity to begin saving their own money toward future health-care costs, housing expenses, transportation, education, and other needs without jeopardizing eligibility for critical government benefits.

Eligibility under the ABLE Act is limited to those 26 and under, with a $14,000 cap on yearly contributions. A total of $100,000 tax-free can now be accumulated in a special ABLE account, which is limited to one per person.

Prior to the passing of the ABLE Act, individuals with disabilities were unable to have assets totaling more than $2,000 or earn more than $680 per month without forfeiting eligibility for government programs like Medicaid. This was worrisome for families, considering that Medicaid is often the only healthcare option available for those with significant disabilities.

To protect such benefits, then, parents of disabled children would often go to great lengths to avoid putting assets, donations or inheritances their child’s name. But now, under this law, families have new opportunities to help their child save for the future while keeping much-needed government benefits intact.

Additionally, the ABLE Act offers another exciting benefit in that disabled individuals will no longer be deterred from pursing gainful employment opportunities in the local community.

Prior to the passing of this law, individuals who had some capacity to work and contribute to society were often deterred from doing so out of fear of they would cross the income thresholds of their benefits and lose everything. Now, young people with disabilities can take a chance in pursuing meaningful work opportunities without sabotaging their financial future.

As an Atlanta special needs attorney, I feel this is a wonderful law and a positive step forward in empowering disabled children and young adults. An ABLE Account combined with solid planning tools such as Special Needs Trusts now affords families with even more protection and flexibility when saving for the future. A good special needs attorney can help families utilize these tools for maximum savings opportunities and peace of mind.

Atlanta Special Needs Attorney Answers, “What is a Special Needs Trust?”

By: Steve Worrall, Atlanta special needs attorney Dreamstime_4299037

As an Atlanta special needs attorney, I’m often asked, “What exactly is a Special Needs Trust?”

 For starters, a special needs trust is legal entity created to hold assets of a person with a mental or physical disability. The trust names a trustee whose job is to manage the assets and distribute them according to the provisions of the trust.  There are specific limitations on the way assets can be distributed so that they do not disqualify the beneficiary from eligibility for government programs.

There are two primary types of special needs trusts.  They are:

Self Settled Special Needs Trusts

In a self settled special needs trust the assets in the trust belong to the beneficiary.  For example, if the person becomes disabled due to negligence of a doctor or car accident, it is possible that the beneficiary received a settlement as a result of litigation.  In this case, a self settled special needs trust would be created for the beneficiary to receive and hold the settlement funds in order to preserve government benefits.

Third Party Special Needs Trusts

A third party special needs trust is created by a third party with assets that belong to the third party.  For example, the parents of a child born with Down syndrome or autism might create a special needs trust for their child as a part of their overall estate plan.  In the case of a third part special needs trust, family members may make lifetime gifts to the child.

Distributions for Special Needs Trusts

In order to preserve government benefits it is important to direct the trustee not to pay for services that are provided by a government agency.  If done correctly, the assets in the special needs trust will not be counted as a resource.  The trust must authorize distributions only for special or supplemental needs.  Some examples of this might include dental care, specialized therapy, and services of a care giver. Improper distributions of a special needs trust can cause a loss in government services, so it is critical that the trust be set up and then managed properly.

Who Should Create a Special Needs Trust?

Not all Atlanta estate planning attorneys have the training, expertise or knowledge to create a special needs trust.  You should consult with an attorney who is experienced in creating these trusts and who knows how to properly advise trustees.