An ABLE account won’t replace a Special Needs Trust or Pooled Trust. There are some key differences that are meant to give people with disabilities and their families more options.
With an ABLE account:
- There are less expenses than setting up a trust.
- The beneficiary owns the funds and can access them for eligible expenses.
- Earnings are tax-free advantaged.
- There’s a yearly limit of $15,000 and a lifetime maximum of $310,000.
- Funds can be used for housing without affecting benefits.
With a Special Needs Trust or Pooled Trust:
- You have to set up a trust.
- The beneficiary has to get approval of the trustee to receive a disbursement.
- The earnings are taxed at trust rates.
- There are no limits on contributions or balances.
- Amounts in a Third-Party Special Needs Trust are generally not subject to a Medicaid recovery upon the death of the individual with disabilities.
- Funds can be used for housing, but benefits will be affected.