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Learn How An ABLE Account Can Help Your Family

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ABLE Accounts, Special Needs Trusts, Guardianship

Plan for a Loved One with a Disability

Member of the Special Needs Alliance

What are ABLE Accounts?

ABLE accounts are another special needs planning tool that recently became available. Created by the Achieving a Better Life Experience (ABLE) Act, these accounts were introduced in New York State in 2017.

ABLE accounts allow an individual with a disability to save money without losing their eligibility for public benefits. They are similar to special needs trusts, but with important differences.

ABLE accounts are tax-advantaged accounts that are comparable to 529 savings plans for college. Funds deposited in an ABLE account do not count as resources for Medicaid eligibility, and they do not affect SSI eligibility as long as the balance stays at $100,000 or less. Distributions from the account are not considered income to the individual by either program.

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What Our Clients Say About Us

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I highly recommend Litman Krooks for special education needs and advocacy. Marion Walsh and Sandi Rosenbaum were able to help us secure the educational services that our child needed, and they did it with extremely little time to prepare. We were very impressed with their responsiveness and willingness to take our case with just a few days notice.

- S.M-C. February 21, 2018

The professionals at Littman Krooks are top notch, smart, attentive, and effective. Our case against the school district for our daughter was resolved in a positive outcome within weeks. I would highly recommend Marion Walsh for all of your most complicated situations. She has great experience and knows the law!!!!

- T.N. March 2, 2018

Bernie Krooks is among the leading Elder Law Attorneys in the country and I have seen how he serves his clients with professionalism, unsurpassed knowledge and true empathy. As an attorney, I have worked with Bernie on a number of cases. I have seen first hand how he exceeds client expectations. Very impressive.

- S.M. March 4, 2017

Amy O'Hara, Esq, and her support team were first rate in addressing our estate planning needs. They are experts in the field, skilled and quite professional. They were very helpful to us.

- T.B. January 8, 2018

Our family relied on the calm caring expertise of the Littman Krooks staff and attorneys to guide us through a difficult time. I have recommend the firm wholeheartedly to other families and will definitely use them again should the need arise.

- P.F. February 4, 2019

New York Special Needs Planning Lawyer

It takes careful planning to provide properly for a loved one with a disability. Families with children with special needs have to be aware of financial planning tools like special needs trusts. They also must consider guardianship and transition planning, as well as providing for their loved one in their estate plan.

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Differences Between an ABLE Account and a Special Needs Trust

ABLE Account First-party Special Needs Trust Third-party Special Needs Trust
Governing authority 26 USC §529A (tax code) 42 USC §1396p(d)(4), NY SSL§366 & NY EPTL§7-1.12 NY EPTL§7-1.12
Payback provision Yes. State entitled to receive all ABLE balance at death of beneficiary up to amount of Medicaid provided Yes. State named as remainder beneficiary to extent of Medicaid provided No
Beneficiary eligibility Individual entitled to Social Security benefits (or otherwise disabled) before age 26 Under 65 at time of trust creation and disabled by Social Security definition No limits or requirements
Grantor/settlor Any person (but beneficiary owns account) Person with disability, parent, grandparent, guardian or court Anyone other than person with disability
Tax issues No tax on earnings; distributions taxed unless used for “qualified disability expenses” Trust earnings taxed to beneficiary under grantor trust rules; no separate tax on distributions Sometimes income taxable to person contributing money to the trust; otherwise taxed at higher trust rates but distributions to or for beneficiary may carry out income tax liability also possible Qualified Disability Trust.
Effect of distributions on benefits If for “qualified disability expenses,” no effect on eligibility or benefit levels Only distributions for food and shelter raise issues re: eligibility; distributions directly to beneficiary general precluded Distributions to beneficiary may cause benefit reduction or loss, as may distributions for food or shelter; other distributions have no effect on most eligibility programs
Management of assets State program provider; account holder may choose state Someone other than beneficiary; court often supervises Someone selected by settlor; often family members but sometimes professionals (with costs and bureaucracy)
Countable resource? Yes for SSI if balance exceeds $100,000 No
Maximum contribution Gift tax exemption amount ($14,000 in 2017/$15,000 in 2018) per year total, from any source No limit
Limit on number of accounts 1 per beneficiary No limit

How a Special Needs Planning Attorney Can Help

ABLE accounts are simpler to set up than special needs trusts, but consulting with a special needs planning attorney is still recommended.

ABLE accounts are only available to people whose disability began before age 26, but special needs trusts have no such restriction. Special needs trusts also do not have the contribution limits that ABLE accounts have. An individual may have both a special needs trust and an ABLE account, and choosing the right options for you and your family should be done with the advice of your attorney.

 

We look forward to helping you build a secure foundation for your child’s future.

New York Special Needs Planning Lawyer

Littman Krooks is a Proud Member of the Special Needs Alliance

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The Special Needs Alliance is a national organization comprised of attorneys dedicated to the practice of special needs, guardianship, disability and public benefits law.

The Special Needs Alliance is an invitation-only organization whose membership is based on a combination of relevant legal experience in the disability and elder law fields, direct family experience with disabilities, active participation with national, state and local disability advocacy organizations, and professional reputation. Littman Krooks is the only firm in the Westchester, Hudson Valley and New York City area with Special Needs Alliance members.

 

Call A Special Needs Planning Attorney Today:
(914) 684-2100

Knowledge and Experience

Littman Krooks LLP combines extensive legal knowledge and expertise with individual attention to your needs. For over 25 years, we have brought astute, honest counsel and strong, thorough representation to every one of our clients.

Bernard A. Krooks
J.D., CPA, LLM (in taxation), CELA®, AEP® (Distinguished), Founding Partner
Bernie is a founding partner of Littman Krooks and Chair of its Elder Law and Special Needs Department. He is a nationally-recognized expert in all aspects of elder law and special needs planning.
Amy C. O'Hara
Partner
Amy focuses her practice on special needs planning, trusts and estates, personal injury settlement consulting, and elder law.

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Littman Krooks LLP

New York City Office
655 Third Avenue,
20th Floor
New York, NY 10017
(212) 490-2020 Phone
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Westchester County
399 Knollwood Road
White Plains, NY 10603
(914) 684-2100 Phone
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© 2019 LITTMAN KROOKS LLP. ALL RIGHTS RESERVED.

This article does not constitute legal advice and should not be relied upon. If you need legal advice concerning this or any other topic please contact our offices to schedule a consultation with one of our attorneys at 914-684-2100 or 212-490-2020.