Bay Area Estate And Tax Planning Law Firm

A continued look at ABLE and its utility as an estate planning tool

On Behalf of | Dec 13, 2018 | Uncategorized |

We spotlighted the ABLE program in our previous blog post. We noted in our December 11 entry that this federal government initiative can provide valuable benefits for disabled individuals and their families.

ABLE does so by enabling eligible claimants to make non-deductible contributions into accounts that let them grow tax-free. Account holders can apply distributions from savings vehicles (also without tax consequences) toward a wide-ranging list of so-called “qualified disability expenses.”

That is obviously a boon for many families. Candidly, though, it is not the only game in town, a point expressly noted by one in-depth overview of tax-advantaged estate planning programs for disabled individuals.

In examining the benefits and particulars of the ABLE program, that article purposefully references one additional and quite distinct planning tool for contrastive purposes. Namely, that is the special needs trust (SNT). The article’s focus on that vehicle notes that SNTs “are well-established savings tools that also (like ABLE accounts) protect eligibility for public programs.”

What is the better choice for an eligible participant and his or her family? When it comes to ABLE accounts and special needs trusts, is one clearly optimal?

A “that depends” answer is a default response to that query. Every family situation is unique, and the rules and processes surrounding the two planning tools differ markedly in many respects. The above primer advises families “to consider their specific circumstances before establishing one or the other.” In some instances, it adds, “it may be beneficial to create both.”

An established estate administration attorney with complementary tax-planning credentials can assist with the analysis and help a valued client make a truly informed decision.