The Achieving a Better Life Experience (ABLE) Act was signed into law by President Barack Obama in December 2014. The North Carolina ABLE Act was passed in August 2015. These laws have been a great help to many people with disabilities and their families, but there is also a lot of confusion about what the ABLE program is and how it works.
What is an ABLE account?
An ABLE account is a type of 529 plan which allows qualifying people with disabilities to save and invest money while staying eligible for government assistance. As of 2017, contributions to an ABLE account are limited to $14,000 of cash contributions per year.
Who can set up an ABLE account?
The ABLE account can be set up by the beneficiary of the account or the beneficiary’s parent (if the person is under 18), legal guardian (if the person is over 18 and incompetent), or agent acting under a power of attorney. To qualify for an ABLE account, the beneficiary’s disability must have occurred before age 26 and the beneficiary must be able to provide proof of impairment resulting in “severe functional limitations,” or is receiving or eligible to receive SSI or SSDI.
How do you set up an ABLE account?
A North Carolina ABLE account can only be opened by visiting the NC ABLE website. You can submit the forms to open an ABLE account online, or you can print the forms and mail them in.
When should I set up the ABLE account?
If you are setting up the account for yourself or your minor child, you can easily set up an ABLE account at any time. However, if a disabled person reaches age 18 and is unable to set up the account, a parent must be named as the guardian of the person’s “Estate” (funds) to set up the account. This is a complex process that requires court supervision, so it is best to set up the account while the disabled person is still a minor.
What can you use an ABLE account for?
Funds in an ABLE account can only be used for “qualified disability expenses” (QDEs). As the name suggests, QDEs are expenses that are related to the beneficiary’s disability. Such expenses include education, housing, transportation, employment training and support, assistive technology, health care, financial management, legal fees, and more.
How does an ABLE account affect SSI benefits?
An individual who is receiving SSI benefits can continue to receive benefits as long as the disbursements made from the ABLE account are for qualified expenses and the account balance stays under $100,000. If the account balance exceeds $100,000, SSI benefits will be suspended until the balance falls below $100,000.
How does an ABLE account affect Medicaid benefits?
Individuals who qualify for Medicaid can keep their Medicaid benefits as long as the disbursements made from the ABLE account are for qualified expenses and the account balance stays under a limit which is set by state law. As of 2017, the limit in North Carolina is $450,000.
Can an ABLE account replace a special needs trust?
Whether an ABLE account can be used instead of a special needs trust will depend on each individual’s unique situation. ABLE accounts have become popular because they are easy to set up and give beneficiaries some control over their money. However, ABLE accounts are also very restrictive in some ways. The attorneys of Wallis Law Firm, P.A. can help you decide if an ABLE account or a special needs trust (or both!) is best for you. Contact us today to set up a consultation!
This is information, not legal advice. We are offering some general information on a topic that may be of interest. This is not legal advice. Your circumstances will be different from anyone else’s. If you have questions about ABLE accounts, please call our office and make an appointment for a consultation. We will be very happy to work with you.