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March 20, 2024 16 mins

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This episode of Advice From Your Advocates Podcast is especially helpful for anyone concerned with financial security for a loved one with disabilities. Join host Attorney Bob Mannor as he discusses upcoming changes to the ABLE Act.

The ABLE Act (Achieving a Better Life Experience) is a program that provides financial support for individuals with special needs or disabilities who are on Medicaid or Social Security Disability. It allows for contributions to an ABLE account, which provides financial support without affecting disability or medical benefits.  In this insightful discussion, we navigate the nuances of providing financial support without endangering Medicaid or SSI benefits.  Hear about the increase in the age limit for eligibility and the empowerment of individuals with disabilities to create their own special needs trusts.

We also explore why the ABLE Act is a great option for families with children or grandchildren with special needs, as it allows for more flexibility in spending compared to a special needs trust.

This episode isn't just a rundown of facts; it's an essential resource for families and professionals seeking to maximize support for those with disabilities. 

Takeaways

  • The ABLE Act provides financial support for individuals with special needs or disabilities on Medicaid or Social Security Disability.
  • Contributions to an ABLE account do not affect disability or medical benefits.
  • It is important to determine disability before age 26 to participate in the ABLE Act program, but changes may be on the horizon
  • The ABLE Act allows more spending flexibility compared to a special needs trust. 

Host: Attorney Bob Mannor
Executive Producer: Savannah Meksto
 
Learn more about Mannor Law Group. 

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ABOUT US:
Mannor Law Group helps clients in all matters of estate planning and elder law including special needs planning, veterans’ benefits, Medicaid planning, estate administration, and more. We offer guidance through all stages of life.

We also help families dealing with dementia, Alzheimer’s disease, Parkinson’s disease, and other illnesses that cause memory loss. We take a comprehensive, holistic approach, called Life Care Planning. LEARN MORE...

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Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
You're listening to Advice from your Advocates, a
show where we provide elder lawadvice to professionals who work
with the elderly and theirfamilies.
Welcome back to Advice fromyour Advocates.
I'm Bob Manor.
I'm a certified elder lawattorney in Michigan, and we
today are going to talk aboutsomething that is useful

(00:20):
information for anybody in theUnited States, and this is
particularly useful regardingsomeone that has someone with
special needs or disabilities,and that is the ABLE Act.
So the ABLE Act stands forAchieving a Better Life
Experience.
It was passed several years agowith the idea of being able to

(00:40):
provide financial support forsomeone that is potentially on
Medicaid, potentially on socialsecurity disability,
particularly if they're on SSIdisability, meaning that they've
never been able to work, neverbeen able to pay into the social
security system, and so this isa really great program that I

(01:04):
encourage everybody to at leastknow about and likely would use
at some point if they havesomeone in their family
especially when they're childrenor someone like that that has
special needs and cannot work.
Okay, this is regarding thedisability program.
This is not generally intendedfor older adults.
I know a lot of theconversations that we have on

(01:26):
this podcast is about olderadults, but this is so important
and it couldn't be important toolder adults because they have
children.
They have children with specialneeds, or you have
grandchildren with special needs.
This can be very important ifyou have a grandchild with
autism or a grandchild withthousands, or something like
that any special needs.
Now, right now, the law says inorder to participate in this

(01:48):
program, you have to have beendetermined to have a disability
prior to age 26.
This is a really importantelement to this and we're going
to get back to that,particularly because they've
actually made the law a littlebit better and in a few years,

(02:09):
they're going to change that ageat which you have to have been
determined the disability by.
But to start off, with what arewe talking about with the ABLE
Act?
What allows you or your parentsor anybody who's interested in
providing some support to theperson with special needs that
can't work?

(02:29):
Some financial support, and youget benefits too.
Okay, so if you contributemoney to someone's support, you
can put it in the ABLE account,you get a tax deduction and it
does not affect their ability toreceive disability or medical
benefits or things like that.
This is so important.

(02:50):
So a lot of times, people don'trealize if you've got a child
with special needs, you've got agrandchild with special needs
and you give them money, you payfor things for them, it could
affect their and probably willaffect their ability to receive
their disability check and themedical benefits.
Now some people say, oh, youknow, disability checks are so
small but the medical benefitsare very, very important.

(03:13):
Now, why is it so important toknow about this?
Well, one of the things that Isee sometimes with families is
that they have a child withspecial needs, with autism or
downs or things like that, andthey say, well, you know, my
child is going to be on ourhealth insurance through age 26.
They were going to support them, but they don't really need.

(03:37):
It's not very much money.
You know that comes from SocialSecurity disability, so we're
not even going to go throughthat process right now.
Well, when we have this age 26time limit, it's important that
we go through that before age 26.
So we have that designation,otherwise we won't be able to
participate in the ABLE Act, atleast under the current law.
And so I encourage families,even if they say, well, we don't

(04:00):
really want that, we're goingto be on, my son's going to be
on our health insurance throughage 26.
Maybe we'll worry about itlater, but it might be too late,
because you really want to havethat.
Go through that process, getthat designation, so that you
can qualify for this program,the ABLE Act.
So why is this so important?

(04:21):
Well, what it does is it allowsthe person with the disability
that isn't going to be able towork.
It allows them to have somemoney that's less restrictive
than other things.
Even if you've ever heard of aspecial needs trust, you can pay
for things out of the ABLE Actaccount that you can't pay for

(04:44):
out of a special needs trust andit won't affect the social
security disability.
It won't affect the Medicaidprogram.
So this is really for peoplethat have somebody in their
family, and who of us don't.
It seems like if you have a bigfamily, you're going to have
some folks that have somespecial needs and aren't able to
work, but for any family thathas someone that really isn't

(05:07):
going to have any substantialwork in their life, it's not
going to be possible.
This is a great program.
Now should you contribute to itthis year?
Well, do you need a taxdeduction?
Maybe you should havecontributed to this year.
Sometimes we wait and we say,okay, well, we're going to, as a
parent, we're going to makesure we're taking care of our
child and we're going to set upa special needs trust for them,

(05:28):
because they're not able to workand they can't receive an
inheritance.
So if you leave an inheritancewith somebody on disability,
they're going to lose theirdisability.
If you leave an inheritancewith somebody on Medicaid,
they're going to lose theirMedicaid.
So the easy way to avoid thatis we set up a special needs
trust for them.
Should we also do an ABLE Act,maybe?
Maybe we set up the specialneeds trust and then the special

(05:52):
needs trust can fund the ABLEaccount.
Okay, so that's a reallyinteresting way to do it,
because it's easier to spendmoney out of the ABLE account
than it is to spend money out ofthe special needs trust.
So these are some just reallyinteresting planning things, and
I know that some of this canget a little bit confusing,
right?
Well, that's what we're herefor, that's what your elder law

(06:15):
or disability law special needslawyer is there for.
Then they can help you throughthis process to figure out, okay
, where should we be settingthings up for our loved one.
But it is really very importantthat you do it, because if we
don't, then they're going tolose their medical benefits If
you leave them an inheritance orthe alternative is worse in my

(06:38):
view, which is to disinherityour loved one with special
needs.
I've heard that from lawyers.
I've heard that from familieswhere they say well, I was told
I had to disinherit my childbecause they are on disability
or they're on Medicaid.
No, absolutely you do not needto disinherit them.
They will likely need the extramoney, probably more than your

(06:58):
other children or more than yourother grandchildren, and so the
idea is to be set it upproperly.
That's why you wouldn't youknow, you presumably would not
try to perform your ownappendectomy or go to your
neighbor to perform theappendectomy.
Same thing applies with this.
Sometimes you need to get someexpert advice.

(07:20):
A lot of people they say ohwell, you know, I'm just going
to put somebody's name on theaccount, I'm going to put a
beneficiary.
That can have very negativeconsequences if you have someone
that has special needs ordisability, because that means
that they may lose theirbenefits.
So let's talk a little bit moreabout this ABLE account.
The ABLE account was designed.
There's 47 different statesthat have an ABLE account set up

(07:44):
.
So let's say you're in Michigan, where I'm located, do you have
to use the Michigan called myABLE account?
If you choose to, you can.
But you could use the Ohio,what's called the Stable Account
, st Able Account, and sometimes, in the past at least, I've
recommended the Stable Accountover the my Able Account for

(08:07):
Michigan residents.
So you can choose which statehas the details that you want.
And again, this is where youcan get advice from a qualified
lawyer, a qualified disabilityadvocate that knows a little bit
more about which programs arebetter, which programs are going
to be more flexible.
Sometimes you can get a debitcard so it's really easy to
spend out of that account.
It does provide you with thattax deduction.

(08:32):
There is a limit as to how muchyou can contribute every year
and that limit for this year andit just went up, excuse me the
limit for this year is $18,000.
So you need a tax deduction forputting $18,000 in, but only
for one person.
For one person with adisability or special needs,
they can only have $18,000contributed to them.

(08:54):
So grandma can't contribute$18,000, and grandpa can't
contribute $18,000.
Now it's going to disqualifythe account.
So dad can't contribute $18,000, and then have brother
contribute $18,000.
That's going to create aproblem.
But if you each want to do nine, that's fine.
We can have multiple people doit.
It just can't total more than$18,000 in a given year.
There is also a maximum amountthat you'd want to keep in that

(09:19):
account.
I was talking to a familyrecently and they had set up
this ABLE account and they werefairly well to do and they were
trying to make sure that theyhad the special needs, trust and
ABLE account and they said well, we want to make sure that we
maximize.
So every year we'recontributing money, we want to
make sure we maximize that andwe're going to leave it the way
it is and have that availablefor him when we pass.

(09:40):
I said no, that's not how youwant to use the ABLE account,
because there's one negative.
There's one drawback and I lookat it as one of the very few
drawbacks of the ABLE accountand that is that if the person
with special needs dies andthere's money in the ABLE
account, that goes to what'scalled payback, so the state

(10:02):
gets a payback for any moneythat was paid for Medicaid or
disability and if there's moneyleft over.
So what we want with that ABLEaccount is we want to spend that
money, we want to use thatmoney.
So this family that I wastalking to kind of had it
backwards.
They thought they wanted tomaximize that, keep that money
and then just leave it there.
It's the opposite actually.

(10:22):
We want to make sure we'respending that money as we go.
Yeah, contribute 18,000?
Great.
If it gets up to 40,000, 50,000, that's fine, but much beyond
that, unless we know thatthere's a big cost coming up
that we are going to need to paythrough the ABLE account.
I probably would rather leavethat in the special needs trust

(10:43):
and make sure that the ABLEaccount doesn't accumulate too
fast.
Okay, because whatever we can,usually in most of the types of
special needs trusts that we donot all of them, but most of the
special needs trusts we do donot have that payback provision
that says whatever money is leftover goes to the state.
In most of the special needstrusts that we do we call them
third party trusts it will saythat when that person with

(11:06):
special needs or disabilitiesdies, whatever money is left
over goes to your other family,goes to their siblings, goes to
their kids if they have kids,and so that's why we wouldn't
want to put too much money intothe ABLE account but we want to
make sure it's funded as we needit because it's easier to spend
out of that ABLE account.
So there's a couple of goodnews things that you're coming

(11:27):
up on this One is that it isevery year they're gonna adjust
that number.
So I said for this year it's18,000 annually that can be
contributed.
Next year we presume it will goup.
It'll go up a little bit everyyear.
There is a they have passed thelaw that does not take effect

(11:49):
until 2026 and this is gonna bea really good thing because a
lot of people are excluded fromusing the ABLE Act because they
weren't determined to bedisabled prior to age 26.
Now if you were disabled priorto age 26 but weren't determined
by the government to bedisabled before 26, can you go
back and say no, but I haveevidence.

(12:09):
I was in the different classesin school.
I was, I received theseaccommodations, I had all this
other stuff.
It is possible, but it's a lotharder at age 40 to go back and
say yes, I was disabled at age18 or age 9 or whatever it is.
It's so much easier to do it.
You know, at the same time,prior to age 26.

(12:31):
But the really good news is,starting in 2026, the age at
which you have to becomedisabled before you can use this
program is gonna be risen toage 46.
That's gonna open up a wholeopportunity for a lot more
people where they can havepeople, contribute to this, get
the tax deduction and still havean ability to have some

(12:56):
additional resources that aren'tgoing to interfere with their
social security disability buttheir Medicaid, things like that
.
This is not for everyone, butsome states that have their ABLE
Act will allow you to have adebit card and in some states
the person with the disabilitycould have that debit card.

(13:17):
So we imagine, like with specialneeds trust, it has to be
someone else in charge of thatmoney.
That just is the way it is.
Has to be somebody else incharge of the money.
They fix the law and now theperson with the disability can
sign the trust, can create thetrust, the special needs trust.
That was not true for manyyears, but a couple years.
The National Association ofElder Law attorneys or National

(13:39):
Academy of Elder Law attorneyslobbied very hard to get that
change, because lots of folkswith disabilities and special
needs are perfectly capable ofmanaging money.
Their special need is physical.
And just because they have aphysical special need and
they're unable to work doesn'tmean they can't manage money.
Well, they still can't be incharge of that special needs

(14:00):
trust.
But now at least they cancreate that special needs trust
for themselves.
It used to have to be a parentor a grandparent or a court, now
the person themselves.
What if you don't have a parentor a grandparent and don't want
to spend the money to have acourt do it, then now you can do
it yourself.
If you're the one with specialneeds but you can't be in charge

(14:21):
of the money, you have toappoint someone else to be in
charge of the money.
Whereas the ABLE Act you canhave that debit card, right, you
can have that yourself Ifyou're competent.
You just have physicalrestrictions.
That makes sense, right?
So a lot of times most of thelaws say, oh, that person can't
have more than a couple thousanddollars, they can't have more
than this amount of income.

(14:42):
Well, that's, you know, that'sreally kind of not great for the
person's morale, the person'syou know self-esteem to say,
okay, I'm only allowed to havethis much money, I'd like to be
able to go on a vacation and beable to buy myself dinner, you
know, and with the ABLE accountyou can do that, and some states
allow that.

(15:02):
And when I say some states, itdoesn't mean the state that
you're in, it's mean the statethat you set up your ABLE
account in.
So great program.
I really like it.
I'm so glad that they did it.
The irony of it is, when thiswas passed, a lot of the
politicians had expressedinterest in that.
They thought that by having theABLE Act, it meant that you
wouldn't need to get an attorneyto be able to have money set

(15:25):
aside for if you had specialneeds or a non-disability, and
so it was sort of designed to beagainst attorneys.
And the reality is, as attorneysthat do this type of work,
we're like great, more options.
Yeah, we want it, even if itdoesn't involve an attorney.
We want the right options forour clients, for our folks that
we're trying to help, and, guesswhat?

(15:46):
We're able to use it inconjunction with special needs,
trusts and things like that.
So it's a great option.
It's not necessarily somethingyou have to do this year, but I
think it's great to educateyourself about it and make sure
it's part of your overall planin helping out, whether it's you
that have special needs ordisability around social
security disability, or if it'ssomeone in your family, one of

(16:08):
your children, something likethat.
So great option, and feel freeto reach out to us for more
information about the ABLE Act,but that's fun to update you on
some of the changes that arecoming.
Well, thank you for listening,and if you're interested in more
topics that we cover throughadvice from your advocates,
don't forget to subscribe.
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