Financial Resources: Special Needs Trusts, ABLE Accounts

Special Needs Trust

A Special Needs Trust is a legal document written to benefit a person with special needs to supplement any benefits the person with special needs may receive from government programs.  A properly written Special Needs Trust will protect the individual’s government benefits while the person is receiving funds from the trust. 

A Specials Needs Trust can be written as a guide to the specific financial needs to achieve developmental, educational and recreational goals the person will pursue.  Example: Funding a gym membership or season tickets to a favorite sports team. 

 It is important to engage an attorney that is licensed in your state and that specializes in special needs trust.  Writing a will at the same time is helpful to designate specific proceeds of an estate to the Special Needs Trust and establish guardianship of a minor child. 

There are many options to fund a Special Needs Trust. Most commonly proceeds from life insurance policies, investments, and gifts from families.

It is suggested to consult a financial and tax advisor to create a plan for funding the trust. See our recommended contacts.

ABLE Accounts (STABLE in KY)

Able Accounts do not replace the need for a Special Needs Trust but is an additional option to provide financial stability and protect benefits for an individual with special needs. 

ABLE Accounts, which are tax-advantaged savings accounts for individuals with disabilities and their families, were created as a result of the passage of the Stephen Beck Jr. Achieving a Better Life Experience Act of 2014 or better known as the ABLE Act. The beneficiary of the account is the account owner, and income earned by the accounts will not be taxed. Contributions to the account, which can be made by any person (the account beneficiary, family, friends Special Needs Trust or Pooled Trust), must be made using post-taxed dollars and will not be tax deductible for purposes of federal taxes; however, some states may allow for state income tax deductions for contributions made to an ABLE account.

The total annual contributions by all participating individuals, including family and friends, for a single tax year, is $15,000. The amount may be adjusted periodically to account for inflation. Under current tax law, $15,000 is the maximum amount that individuals can make as a gift to someone else and not report the gift to the IRS (gift tax exclusion).

Helpful tip- Coordinate opening an Able account with a Special Needs attorney, financial planner, and tax consultant… 

Kentucky Residents visit  www.stablekentucky.com  

Indiana Residents visit savewithable.com/in/home

Recorded Sessions on Financial Planning

• Podcast:
  • Special Needs Trusts & Guardianship: Local DSL Session

    This episode is a live recording* of an educational panel we held at Down Syndrome of Louisville, “Special Needs Trusts and Guardianship.” This is part one, which mainly focuses on Special Needs Trusts.

• Planning for the Financial Future of Individuals with Ds: Part 1
• Planning for the Financial Future of Individuals with Ds: Part 2

Financial & Legal Recommended Contacts