What is an ABLE account?

The Achieving a Better Life Experience Act allows individuals whose disability occurred prior to age 26 to place up to $17,000 per year into a special savings account. There is no limitation on the number of individuals who can contribute to the account, but the disabled beneficiary may have only one account. Funds in an ABLE account will not be counted in determining the disabled person’s eligibility for Supplemental Security Income (SSI) unless the account exceeds $100,000. Upon the death of an ABLE account holder, Medicaid may require reimbursement from the account for services provided after the disabled individual established the account.

What is a letter or memorandum of intent?

A letter of intent is a letter directed to the trustee of a trust benefiting a disabled child. It is typically prepared by a parent with the help of an attorney and provides a highly detailed account of the child’s medical, behavioral, educational, social, and personal needs and preferences.

What is a Supplemental Needs Trust?

Unlike a Special Needs/D4A Trust, a Supplemental Needs Trust is funded with the assets of a third party, typically a parent. A major benefit of this type of trust over a D4A trust is that that the state does not require that the remainder of the trust assets go toward reimbursing the state for benefits paid after the beneficiary’s death.

What is a Special Needs Trust?

A Special Needs Trust, or a “D4A” Trust, is a trust funded with the disabled beneficiary’s own assets. The trust may be nominally funded and it must be established before the beneficiary reaches the age of 65. A major benefit of these trusts is that, aside from the management of assets for the beneficiary, if the beneficiary receives any gifts, bequests, or settlement proceeds from a lawsuit, the funds can be placed into the trust without disqualifying the beneficiary from receiving public benefits.