I received a call from Joan. She told me that her sister Mary is named as an heir to part of their uncle’s estate. Mary is disabled and living in a group home. Joan was concerned that the inheritance Mary would receive of approximately $200,000 would jeopardize her government benefits and continued residence in the home.
Joan did a little research on the internet, always a little dangerous. She concluded that in order for Mary to preserve her benefits, she has two options. She can either have a special needs trust set up for Mary which could receive the inheritance proceeds or she could set up an ABLE account for Mary into which the proceeds could be placed.
An ABLE account is relatively new. The Achieving a Better Life Experience Act of 2014 was passed by Congress and was intended to allow for the creation of something similar to 529 accounts for the benefit of disabled individuals. While the law is now almost 3 years old it took some time before financial institutions and organizations began offering the accounts. See my blog posts on 1/12/2015 and 1/19/2015 for more details.
Joan called because she wanted my opinion. She was leaning towards setting up an ABLE account for Mary. “I think it is easier to open and manage an ABLE account than an SNT and I don’t need an attorney if we use an ABLE account”, she told me. “What do you think,” she asked.
I told her she was incorrect. An SNT in Mary’s case is the only option. Next week I’ll tell you why.