What is the ABLE Act?
The ABLE Act is the Achieving a Better Life Experience Act. It is federal legislation that the states are in the process of adopting. It allows extra dollars to be set aside by the beneficiary or parents of children with special needs, to create this type of account to hold dollars for them. The beneficiary needs to be considered disabled prior to the age of 26. Only 1 account can be established for the beneficiary, and the beneficiary is the one who is actually in control of the account, unless a court appointed guardian has been established.
Only 14,000 per year can be contributed to the account by any individual interested in contributing to the account. If the account reaches a maximum of 100,000 dollars at any time during the life of the account, then SSI benefits of the beneficiary can be lost. At the time of the beneficiary's demise, any state that has added to the medical assistance can be reimbursed for the medical assistance provided by the state to the beneficiary. So, there is a payback provision against the funds in any ABLE account at the time of the beneficiary's demise. An ABLE account can be used in conjunction with a 3rd party special needs trust.