Peacock Tales • Summer 2017
By: Susan Mondik Key
I n 2014, the federal government enacted the Achieving a Better Life Experience Act (ABLE), to allow individuals with disabilities to save money in
a new type of tax-exempt savings account, for their long term health care, housing and transportation costs. ABLE accounts present an alternative to the creation of a Special Needs Trust, allowing an individual with a disability to open an account which will not be considered a resource when determining eligibility for Supplemental Security Income (SSI) and Medicaid (called Medical Assistance in Pennsylvania) in those states which adopt corollary legislation.
Fortunately for disabled individuals living in Pennsylvania, in 2016 the Pennsylvania Legislature enacted ABLE legislation, and the Pennsylvania Treasury Department is in the process of implementing ABLE.
ABLE accounts provide flexibility. Because ABLE accounts are not to be considered in determining an individual's eligibility for SSI or Medical Assistance, an ABLE account may be established and funded while the disabled individual retains eligibility for those benefits. ABLE accounts may be established by the individual with the disability, by his or her parent or legal guardian, or by his or her agent under a power of attorney. A maximum of $511,748.00 can be placed in the fund, to be invested in the individual's choice of several mutual-fund type options. Funds in the account can be used for a wide-range of disability-related expenses, without jeopardizing the individual's eligibility for other programs on which
he or she may depend. Unlike a special needs trust, the beneficiary of an ABLE account may manage the account and make the determinations as to what distributions are appropriate. As a convenience, PA ABLE will be designed to allow for electronic withdrawals, using a debit card.
ABLE accounts also provide tax benefits. Earnings on the funds invested grow tax free; when used for qualified disability expenses, withdrawals from the account are exempt from federal and state taxes. In addition, Pennsylvania has provided an exemption from the state's inheritance tax.
The Pennsylvania Treasury Department has created a website for the ABLE program, where interested individuals can receive general information and updates, and open an account when the program is operational: www.paable.gov. And, as always, more information can be obtained by contacting your Peacock Keller estate planning attorney.
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