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Careful when you load up the barrel

Protect benefits for your disabled beneficiary

Kate Gleason Picture

Financial planning for someone with a disability requires careful consideration. A lot of people who aren't familiar with the complexity often assume you just sock away as much cash as you can and make sure you update your beneficiaries. When planning for beneficiaries who are disabled, it's more than just setting aside funds. Beyond financial resources, your children or loved ones will have needs beyond just money. There are tons and tons of things to consider and a variety of ways to tackle this goal. We'll focus on a couple of concepts and keep things very high level only to pique interest in a deeper discussion and in-depth planning with the right attorney and someone from our team.


Two prominent tools can help: ABLE Accounts and Special Needs Trusts (SNTs). Both offer ways to save money without jeopardizing eligibility for vital government benefits like SSI and Medicaid. These are huge benefits to help afford additional financial aid. Not sure what an ABLE account or SNT is? We'll introduce them conceptually so you have a better understanding of which may help. Let's explore the key differences to help you decide which might be right for your situation.



ABLE Accounts: Launched in 2014, ABLE accounts are like tax-advantaged savings accounts for individuals with disabilities. Contributions grow tax-free, and qualified disability expenses – education, housing, transportation – can be withdrawn tax-free as well. That's huge! There are contribution limits (around $15,000 annually) and some asset limits, but ABLE accounts are generally easier to set up and manage than SNTs. Almost a decade old and many families aren't even aware that they're available to help or how they work.


Special Needs Trusts: SNTs are legal arrangements created by a trustee to hold assets for the benefit of a disabled person. Unlike ABLE accounts, there are no contribution limits, offering more flexibility for larger contributions. SNTs can also be used for a wider range of expenses, including basic needs and recreation. At first glance, this sounds like it could suit more families, but there's more to it than just flexibility. However, SNTs involve legal fees and require more ongoing management by the trustee.


Choosing the Right Fit:


  • Consider Contribution Amounts: If you have a significant amount to save, an SNT might be better. ABLE accounts were a nice addition and gave people choices and different price points.


  • Management Complexity: If simplicity is key, ABLE accounts are easier to navigate. Seemingly basic, but it can do a great job for those comfortable with the restrictions on funds going in and how the money can be used.


  • Expense Needs: For a broader range of qualified expenses, an SNT might be preferable. Because of the additional expense, complexity, and ongoing management, this could be more attractive for those with the means to contribute significant amounts to help their disabled beneficiary.


After choosing the best path for your disabled beneficiary, there are other aspects of the plan that will come into play. Partnering with the right financial and legal team to execute your plan will be crucial. We know there are tons of great firms out there, but the hope is we stand out. We take pride in planning with you to be sure your family maintains dignity and respect while your loved ones continue to be the superstars they are!


Kids in superhero costumes playing

Important Note:  This is a high-level overview. It's crucial to consult with a financial advisor and attorney specializing in disability law to determine the best option for your specific needs. They can guide you through the intricacies of ABLE accounts, SNTs, and how they work together with government benefits. By taking a proactive approach, you can ensure financial security for your loved one with a disability.


If you haven't checked out my PennyWise Financial Podcast, watch a clip from an episode recorded this year on Valentine's Day. I take a look at the market performance, and positioning and talk about patience paying off big time! It's all about setting expectations.


Scroll down a little past the clip to watch the entire episode. It's available on all major podcast platforms like Apple Podcasts, YouTube Music, Spotify, Amazon Music, and YouTube.



👇Or click below to watch the full Episode



Everyone wants to offer advice. We hope you have the right person. A trusted person to guide you on your path to achieving your goals. If you're not working with the right team or want a second opinion, we hope you consider our services. Follow our content to learn more about our process, and investment philosophy and hear real-life accounts of what our clients are dealing with and how we help them.


And that's only the beginning. Reach out and schedule a consultation to discuss your situation. We'll walk you through your options and help you make the right choice for your goals. Click below to listen to the latest PennyWise Financial Podcast and hear more commentary on the stuff you need to know, and much more. Check out another episode below or view our catalog of videos by clicking the button linked to our channel.




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