Beyond the Hype: Rethinking ABLE Accounts in Special Needs Planning
Navigating the Nuances and Realities of Financial Planning for Families with Disabilities
The other day, I had a great conversation about ABLE accounts with a Financial Advisor whose focus is helping families with disabilities plan for their future. It reinforced my belief that I’m a bit of a contrarian, at least regarding my opinions about the usefulness of ABLE accounts and when they should be recommended. I feel they get too much press and have become the go-to whenever the topic of Special Needs planning comes up.
A key point to keep in mind is who I started True North Disability Planning to serve. My focus has always been on those families whose children are moderately to significantly impacted by their disability. In most, if not every, case their children are going to need a lifetime of care. These are not kids who are going to college and would likely struggle within the workforce even with the proper support.
Don’t get me wrong, ABLE accounts may still have a place. My son has one. I had set it up right before he turned 18 because he had a UTMA and I needed to get the money out of his name. At the time Maryland (our state of residence) didn’t have an ABLE, so I opened his in Virginia. It’s still there because it’s too much of a pain to close and open a new one in Maryland. And yes, I still add some of his Social Security benefits each month.
I state very clearly in the Roadmaps I’ve created that you should “consider” opening an ABLE account. I want to make sure you’ve done all your other planning before focusing on an ABLE account unless your child has assets that would prevent them from qualifying for means-tested benefits. Sign up for the Medicaid Waiver, get your estate plan in place, and set up the funding mechanisms for their Special Needs Trust. All of these are, in my opinion, generally much more important than opening an ABLE account.
Let’s address the talking points I see most often, state tax deductions, saving for the future, and more flexibility than a Special Needs Trust.
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