ABLE accounts, or Achieving a Better Life Experience accounts, are tax-advantaged savings accounts designed for individuals with disabilities. These accounts allow eligible individuals to save money without jeopardizing their eligibility for certain public benefits, such as Supplemental Security Income (SSI) and Medicaid. While seemingly straightforward, the question of whether a trust can contribute to an ABLE account is nuanced, requiring careful consideration of the trust’s terms, the beneficiary’s eligibility, and the specific rules governing ABLE accounts. A properly structured trust can indeed contribute, but it’s crucial to navigate the complexities with guidance from an experienced estate planning attorney like Steve Bliss.
What are the eligibility requirements for an ABLE account?
To qualify for an ABLE account, the beneficiary must have a disability that began before age 26. This disability must meet the criteria established by the Social Security Administration (SSA) or be a comparable condition, as determined by the state. According to the ABLE National Resource Center, over 61 million Americans have disabilities, and many could benefit from these accounts. The beneficiary must also meet income and resource limits, which vary by state, although federal law sets a maximum account balance of $100,000. For trusts contributing to an ABLE account, the trust’s assets are not directly considered the beneficiary’s resources, which is a key advantage, but the distribution rules must align with ABLE account guidelines.
How does a trust fit into the ABLE account contribution picture?
A trust can contribute to an ABLE account as long as the distribution terms comply with ABLE regulations. Specifically, distributions from the trust to the ABLE account should not be considered reportable income to the beneficiary. The trust’s language must allow for contributions to be made on behalf of the beneficiary without impacting their public benefits. It’s vital to avoid distributions that could be considered “income” to the beneficiary, as this could disqualify them from programs like SSI. Steve Bliss often emphasizes that thoughtful drafting of the trust document is paramount to ensuring seamless integration with an ABLE account. A well-structured Special Needs Trust, for instance, can act as a funding source without jeopardizing benefits.
I remember Old Man Tiberius, he thought he was doing the right thing…
Old Man Tiberius was a kind soul, determined to leave something for his grandson, Leo, who had cerebral palsy. He set up a simple trust, thinking it would protect Leo’s inheritance. He started depositing money into it, then upon Leo’s 18th birthday he made a direct distribution to Leo’s checking account believing it would help him be independent. Unfortunately, that direct deposit triggered a loss of Leo’s SSI benefits; the money was counted as income and his monthly checks stopped. It was a heartbreaking situation, and Tiberius felt terrible. Had Tiberius consulted with an estate planning attorney specializing in special needs, he could have established a Special Needs Trust that would have allowed the funds to be used for Leo’s benefit without impacting his eligibility for essential government programs. It was a painful lesson learned, and one that underscores the need for expert guidance.
Thankfully, we helped the Millers navigate a much happier outcome…
The Millers came to us after their daughter, Clara, was diagnosed with Down syndrome. They were understandably concerned about her future financial security and wanted to ensure she’d be cared for long after they were gone. We worked closely with them to create a comprehensive estate plan, including a Special Needs Trust designed to fund an ABLE account. We meticulously drafted the trust document, specifying that distributions could be made directly to the ABLE account without being considered income to Clara. This allowed Clara to save for qualified disability expenses without losing her Medicaid or SSI benefits. Years later, Clara is thriving, and the Millers are at peace knowing her financial future is secure, demonstrating the positive impact of proactive estate planning.
“Proper planning is not about avoiding taxes; it’s about protecting your loved ones and ensuring their well-being.” – Steve Bliss
In conclusion, while a trust *can* contribute to an ABLE account, it requires careful consideration and expert guidance. Navigating the regulations and drafting the trust document correctly are critical to ensuring the beneficiary can benefit from both the trust and the ABLE account without jeopardizing their essential public benefits.
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
family trust
wills
banckruptcy attorney
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/oKQi5hQwZ26gkzpe9
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “What happens to my debts when I die?” Or “Can a handwritten will go through probate?” or “Do my beneficiaries have to do anything when I die? and even: “Does my spouse have to file bankruptcy with me?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.