Tip of the Week

Coordinating an ABLE Account and a Special Needs Trust

Because of the unique financial and economic stresses facing people with disabilities as a population, clients have a pressing need for clearly worded strategic guidance from financial planners to help them navigate ABLE accounts and SNT options.

When leveraged properly as part of a coordinated long-term portfolio, an Achieving a Better Life Experience (ABLE or 529A) account and special needs trust (SNT) can allow an individual with disabilities to maximize savings above the government resource limit (currently $2,000 for an individual) without losing eligibility for U.S. government benefits.

When combining an ABLE account with an SNT, Financial planners should  address eight key concerns to determine whether it is in a client’s best interests to utilize an ABLE account in tandem with an SNT: (1) eligibility; (2) annual contribution limits; (3) cumulative balance limits; (4) total funds available after account setup fees; (5) total funds available after account administration and/or maintenance fees; (6) Medicaid Estate Recovery factors; (7) spending requirements/goals; and (8) state-based investment options.

Financial planners can provide tremendous value to clients in carefully weighing how to coordinate SNT and ABLE account planning.