The cost of care and support can be as much as $100,000 per year. As a result, most individuals with disabilities will require government assistance, such as Supplemental Security Income and Medicaid. However, these individuals must shelter their assets carefully to not be disqualified from these programs. That’s why people many use special needs trusts and ABLE accounts.
As CNBC’s recent article entitled “Here’s how ABLE accounts, special needs trusts differ ... and how they can work together” explains, there are two kinds of special needs trusts:
Special needs trusts can’t be used for certain basic expenses that are covered by government programs. These are things like groceries, which are covered by Supplemental Nutrition Assistance Program; medical expenses, covered by Medicaid; and housing expenses, covered by SSI.
ABLE accounts, defined as “tax-advantaged savings accounts that can fund disability expenses,” can be used for a range of “qualified disability expenses.”
This is expenditures that help the individual “in maintaining or improving his or her health, independence, or quality of life.” These can cover a computer, communication devices, education, training, financial management, support services, assistive technology, and more.
The individual always has control, as opposed to a special needs trust, where the trustee makes the decisions. ABLE accounts are inexpensive and easy to set up and can be funded immediately with small amounts.
A major feature of an ABLE account is that it lets the individual accumulate more than $2,000 without jeopardizing means-tested benefits. ABLE account holders can keep their funds in cash or they can invest them.
Reference: CNBC (July 30) “Here’s how ABLE accounts, special needs trusts differ ... and how they can work together”
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