Texas prom­ises to act in 2018

The Dallas Morning News - - Seniors - VIR­GINIA N. HAMMERLE legaltalk­[email protected]

It may be a bit late to the party, but Texas has promised to make ABLE ac­counts avail­able in 2018. That is a good thing.

The ABLE Act – Achiev­ing a Bet­ter Life Ex­pe­ri­ence Act of 2014 – al­lows a per­son who was dis­abled be­fore reach­ing age 26 to set aside funds for his or her per­sonal use. The great thing about ABLE is that the ac­count funds do not count as re­sources, or the ac­count dis­tri­bu­tions as in­come, for pur­poses of meansteste­d pro­grams. In other words, this is a way for an in­di­vid­ual to ac­cu­mu­late and spend money that won’t dis­qual­ify him or her from Med­i­caid or SSI pro­grams.

An ABLE ac­count gives an in­di­vid­ual the abil­ity to own a bank ac­count with an ap­pre­cia­ble amount of money. Like a 529, the in­come earned to the ac­count is not taxed.

The fed­eral gov­ern­ment set up the pro­gram, and then left it up to each state to pass leg­is­la­tion to ap­prove and im­ple­ment it. Texas did that in 2015. The reg­u­la­tions are sup­posed to be fi­nal­ized in 2018.

In the mean­time, Tex­ans can set up an ABLE ac­count in one of the 22 states that have al­ready im­ple­mented it. When Texas is up and run­ning, that out-of-state ac­count can be trans­ferred to Texas.

A qual­i­fied ABLE ac­count can be set up by the in­di­vid­ual or by a third party. Only one ABLE ac­count is per­mit­ted to the in­di­vid­ual. The to­tal con­tri­bu­tion for 2018 is limited to $15,000 – the amount is tied to the gift tax an­nual ex­clu­sion amount. The to­tal amount in a Texas ac­count can­not ex­ceed $370,000. That amount is tied to the max­i­mum con­tri­bu­tion al­lowed by a state in a 529 ac­count.

So who can con­trib­ute to an ABLE ac­count? You can. The con­tri­bu­tion can be third-party money, money from a rel­a­tive, money from the in­di­vid­ual, or even money from a trustee.

The qual­i­fi­ca­tion for an in­di­vid­ual is very spe­cific – the in­di­vid­ual must have a dis­abil­ity that makes him or her el­i­gi­ble for SSI or SSDI ITAL and ITAL must have been di­ag­nosed be­fore the age 26. The age of di­ag­no­sis is crit­i­cal – which might push par­ents or rel­a­tives to ac­tively pur­sue get­ting the di­ag­no­sis.

The funds in the ac­count can only be used for qual­i­fied dis­abil­ity pur­poses. That list is pretty broad and in­cludes hous­ing, ed­u­ca­tion and trans­porta­tion. The So­cial Se­cu­rity Ad­min­is­tra­tion sets the rules on what types of uses are per­mit­ted. It calls an ac­cept­able use a “Qual­i­fied Dis­abil­ity Ex­pense.”

The only real draw­back for an ABLE ac­count is the Med­i­caid pay­back – when the in­di­vid­ual dies, the state can re­cover any re­main­ing funds to re­pay it for money it paid out un­der Med­i­caid. But, hey, that may be ac­cept­able to any­one who wants to raise the liv­ing stan­dard of a dis­abled in­di­vid­ual.

There is more good news. In Texas, a judge in a lit­i­ga­tion case or a guardian can now cre­ate and in­vest in an ABLE ac­count.

The ABLE Act – it’s about time.

Find more ar­ti­cles at To re­ceive the monthly email news­let­ters, send your re­quests to legaltalk­[email protected]

The in­for­ma­tion con­tained in this ar­ti­cle is gen­eral in­for­ma­tion only and does not con­sti­tute le­gal ad­vice.

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