1. ABLE Accounts and SNTs How to Choose

2. What are they? ABLE Account SNT
New tax-free savings tool for qualified individuals with disabilities
Doesn’t affect eligibility for means-tested government benefits
Similar to 529 College Savings Plan
SNT
Well-established planning tool that also protects eligibility for public programs
Regulations governing them differ greatly
Consider specific circumstances

3. Eligibility ABLE Account SNT
Beneficiary satisfies Social Security definition of disability
Onset of disability prior to age 26
Most programs open to residents from other states
SNT
Beneficiary satisfies Social Security definition of disability
First Party SNT
Funded with beneficiary’s assets
Beneficiary must be under 65 when trust created
Third Party SNT
Funded with assets from anyone other than beneficiary
No age limits

4. Establishing and Managing
ABLE
Assumes beneficiary has capacity to open and manage account
If assistance needed, can be handled by parents, conservator/guardian, agent under POA
SNT
First Party SNT-Established by beneficiary, parents, grandparents, conservator/guardian or court
Third Party SNT- Established by anyone except beneficiary
Must be managed by designated trustee

5. Investments ABLE SNT Each state program designates investment options
Changes may be made twice annually
SNT
Investments at sole discretion of trustee

6. Use of Funds
ABLE
Qualified Disability Expenses (QDEs) must contribute to health, independence or quality of life of beneficiary
Basic living expenses, education, housing, employment training and support, health care, etc.
Payment for housing without affecting SSI is major benefit
Non-QDE distributions result in taxation of earnings portion of withdrawal, 10% penalty and possible state fine

7. Use of Funds
SNT
At trustee discretion, may pay for anything for sole benefit of beneficiary, other than food and housing, without affecting benefits.
Food and housing expenditures are in-kind support (ISM) and will reduce SSI

8. Fees
ABLE
Nominal fees, generally for maintenance and charges by financial institutions
SNT
Attorney and trustee fees
Pooled SNT combines resources of many sub- accounts and are less expensive

9. Taxes ABLE Earnings are federal income tax-free
Contributions not tax-deductible for federal filings
Contributions qualify for federal annual gift tax exclusion
Tax savings unlikely to be significant for person on SSI or Medicaid and possible state fine

10. Taxes SNT First party trust Third party trust
Generally a grantor trust, with income taxable to beneficiary and often below taxable limits
Third party trust
Proper drafting can minimize taxes

11. Medicaid Payback
ABLE
On beneficiary’s death, state Medicaid has option to require payback for medical and waiver services performed since account opened
Source of contributions makes no difference

12. Medicaid Payback
SNT
First Party Trust - On beneficiary’s death, state Medicaid must require payback for services throughout beneficiary’s life
Third Party Trust – No Medicaid payback

13. Which to Choose? ABLE particularly useful for:
Saving beneficiary’s unspent work earnings or SSI
Small inheritance
Child support or alimony payments
Paying for housing expenses
Small litigation settlements
Consult special needs attorney to assess specific circumstances
One or both tools may be appropriate