Parents of special needs children often have to make special considerations for the lifelong financial care of their children. Even when parents enjoy excellent financial instability, they may choose to put some safeguards in place, in case the situation ever changes.
CNBC explains that ABLE accounts allow special needs persons and their families to set money aside. It operates as a tax-advantaged account and families find it much easier to set up than a trust. It allows special needs persons to hold on to up to $100,000 in assets without losing access to SSI benefits.
Using it in place of a special needs trust
Many people create special needs trusts to achieve the same benefits as an ABLE account. This is a great idea for families making six figures or higher. For everyone else, ABLE may prove far less expensive. When people choose an ABLE account, the special needs person may use the savings for the following expenses:
- Quality-of-life purchases
- Legal fees
Setting up the account
U.S. News explains that not everyone can qualify for an ABLE account. Qualifying persons include special needs individuals who are children who developed a disability before reaching 26 years old. It explains that families may open an account with just $50 and that D.C. and 41 states currently have plans in place. Families may not need to live in the state that owns the plan they choose. For 2020, families may invest up to $15,000.
Family members may need to review plans carefully before making a decision. Some invest savings in FDIC-insured accounts. Others may allow investments in mutual funds. For non-qualifying families, a special needs trust still presents a good option.