Who Can Open and Manage an ABLE Account?
What is ABLE? Tax-free savings option for individuals with eligible disabilities Disability must have appeared prior to age 26 Won’t affect eligibility for means-tested government benefits Can be funded with resources belonging to account holder or others
Capacity Beneficiary assumed capable to open/manage account unless guardianship proceedings determine otherwise Even if beneficiary has capacity, it’s advisable to sign power of attorney immediately Doctor’s letter may be advisable to avoid question of POA validity If health deteriorates, guardianship may also be a consideration
Others Who Can Open and Manage Account If account holder lacks capacity or wishes assistance, only authorized parties are: Agent under power of attorney Parent Legal guardian May not profit from the account during beneficiary’s lifetime Must administer it for account holder’s benefit
Parents with signature authority may want to consider establishing conservatorship or guardianship Should name a successor to manage in event of their own incapacity or death
Minors as Beneficiaries Account must be created and managed by parents or conservator/guardian Automatically considered competent adult at 18 or 21, depending on state—regardless of severity of disability If capacity in question, families should consider establishing power of attorney or guardianship
Comparison with SNTs First party SNT No cutoff age for appearance of disability Beneficiary must by under 65 Can only hold beneficiary’s assets Must be managed by trustee, who has sole discretion regarding distributions
Comparison with SNTs Third Party SNT No age restriction Must be funded with resources belong to someone other than the beneficiary
Linking ABLE Account to SNT ABLE accounts can be empowering, but if there are questions concerning capacity, care should be taken to avoid abuse or mismanagement One strategy: ABLE/SNT link SNT trustee can transfer small amounts to ABLE account As beneficiary gains management skills, amounts can be increased