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By John R. Merlino Jr. Esq.
Founding Attorney

Have you heard of an ABLE account? Many have not, but the New York ABLE legislation was signed into law in December 2015, providing a new savings plan under the New York Achieving a Better Life Experience program in order to give individuals with special needs the ability to maintain savings without jeopardizing their receipt of critical government benefits. Let us take a look at what ABLE accounts have to offer and whether it may be a good option for you or someone you love.

Should You Establish a New York ABLE Account?

In its most basic sense, an ABLE account is a savings account that permits individuals with special needs to maintain savings without risking government benefits such as SSI and Medicaid. Prior to the establishment of ABLE accounts, people with special needs had no reason to save money for their future. Maintaining even the most modest amount of savings would too easily risk the loss of critical government benefits. ABLE accounts provide a mechanism for these individuals to save money in an account that provides tax-free growth and tax-free withdrawals, when funds pay for qualifying expenses, in an account that will not be included in the calculation for income-based government benefits like SSI and Medicaid.

New York ABLE accounts can be opened with as little as $25. While the account may be in the name of the special needs individual and maintained for his or her benefit, family members and loved ones are able to make contributions to the ABLE account as well. The contributions, however, will not be tax-deductible. There is an annual contribution limit of $14,000. ABLE accounts cannot exceed a balance of $100,000 and each person is only permitted to have one ABLE account.

There are, however, some significant restrictions on who can have a New York ABLE account. To be eligible to establish an ABLE account, the individual must have a disability that was present prior to the age of 26. The individual must also be a New York resident (although other states have ABLE account programs of their own). If you qualify for establishing an ABLE account, then you may want to consider doing so for yourself or a loved one who meets these qualifications.

As previously stated, there are several key benefits to establishing an ABLE account. Earnings on the account are tax free and distributions are also tax free when used to cover qualifying expenses. Qualifying expenses cover a broad range including things like education, transportation, housing, and more. You may even want to consider establishing an ABLE account even if the special needs individual is already the beneficiary of something like a special needs trust.

Estate Planning Attorney

Planning for loved ones with special needs is especially delicate because you do not want to risk them losing government benefits, but you still want to help provide for them and help them provide for themselves. At Merlino & Gonzalez, we offer comprehensive estate plans that account for the uniqueness of each client’s circumstances and life. Contact us today.

About the Author
John is a fierce advocate and the office guru for problem-solving and brainstorming. He guides clients through every stage of a real estate transaction from offer to contract, navigating through nerve-shattering home inspection and title clearance concerns, maintaining constant contact with lenders, conducting the actual closing, and continuing to advise clients with regard to any post-closing concerns.  John brings a practical and fair-minded approach to the process which has earned him the respect of his clients and peers.