This act was passed by Congress on December 16, 2014. The intent of the Able Act (achieving a better life experience) is to allow disabled individuals, or their families and friends, to deposit funds into an account which has been compared to a 529 account, so they can have a pool of assets, but still remain eligible for public benefits. Note that each state must pass enabling legislation to make it available in that state, and no word yet on if or when Wisconsin will pass such legislation.
- Low cost
- Can accept first party and third party funds in the same account
- Limited to individuals determined disabled before age 26
- Limit of $100,000 in the account; can only have 1 account
- Only $14,000 can be contributed per year; indexed for inflation
- There is a Medicaid payback on all funds, both first party and third party
- There is no Trustee or other monitor of use of funds; could lead to inadvertent misuse of funds and loss of benefits
If the ABLE funds are used for “qualified disability expenses”, then no income taxation on the interest or gain in value of the fund, and the payment will not be treated as the income of the beneficiary.
The term “qualified disability expenses”, is not fully defined, but the law says will include:
Employment training and support
Assistive technology and personal support services
Prevention and wellness
Financial management and administrative services
Expenses for oversight and monitoring
Funeral and burial
The able accounts will not be right for everyone. However, for many people they will permit another tool in the tool box for planning and making life better for a person who is disabled and on government benefits. For further information, please contact Peter Grosskopf, to make an appointment to come in and discuss this.
Peter E. Grosskopf
Grosskopf Law Office, LLC