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ABLE ACCOUNT, THIRD PARTY SPECIAL NEEDS TRUST AND POOLED TRUST: COMPARE

by
Thomas D. Begley, Jr., CELA

Below is a chart comparing an ABLE Account with a Third-Party Special Needs Trust.

 

 

ABLE ACCOUNT

THIRD PARTY SPECIAL NEEDS
TRUST 
OR POOLED TRUST

Onset of Disability

Qualifying
disability exists prior

to
age 26

 

No
requirement

Age of Beneficiary

 

No
requirement

No
requirement

Who May Establish

 

Beneficiary,
parent, guardian, agent

Anyone
except beneficiary

Number of Accounts

 

One
per beneficiary

Unlimited

Fees

 

Financial
institution fees

Attorney
and trustee fees

Contribution Limits

$14,000
per year (federal gift tax limit); total capped at state limit

for
529 college savings accounts;

SSI
payments suspended when assets

total
$100K

 

Unlimited

Investment Options

Investment
strategies may be changed twice annually

 

No
restrictions

Valid Distributions

Broadly
defined “disability expenses,” including basic living expenses

Any
expenses for sole benefit of beneficiary, with certain implications for
distributions for food and/or shelter

 

Taxes

Earned
income is tax-free

Can
use a variety of planning strategies to minimize taxes that may be due.  Proper drafting and advice will help
to minimize tax concerns.

 

Medicaid Payback Upon Death of
Beneficiary

 

Remaining
funds must reimburse state

for Medicaid benefits.
This is a huge disadvantage for larger accounts.

No
payback

 

 

 

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