ABLE Act – what does it mean to you?

The U.S. Congress passed the ABLE (Achieving a Better Life Experience) Act on December 19, 2014 after a long campaign that started in 2006.  This act mimics a 529 plan, allowing disabled persons to have a tax-free private saving account to pay for qualified disability expenses such as medical, transportation, housing, education and job training, yet still maintaining their eligibility for SSI, Medicaid and other public benefits.  Previously, disabled individual may not have more than $2,000 countable assets in order to qualify for these public benefits.  With an ABLE account, a significantly larger amount of fund can be put aside for the disabled person without jeopardizing his eligibility.   However, there are limitations:

  • the disability of the individual must be established before age 26
  • contributions to the ABLE account is not tax deductible
  • maximum annual contribution to each disabled person’s ABLE account is $14,000 (as of 2015).  This is the total contribution that can be made per disabled person.  Not per donor.
  • maximum amount in an ABLE account is the same as the maximum for a 529 plan. In Texas, it is $370,000
  • once the amount in an ABLE account reaches $100,000, the individual will loose his eligibility for SSI.  However, he will continue to be eligible for Medicaid benefit until the account balance reaches the state limit ($370,000)
  • Upon the death of the individual, the remaining funds in the account will be used to reimburse Medicaid for any services that were provided to the individual since the account has been established.

As you can see, an ABLE account works similarly to a special need trust with some important differences, e.g. the onset of disability at age 26, the maximum amount in the account, and the pay back clause to Medicaid upon death of the individual.  An experienced estate planning attorney will be able to help you decide which tool is a better option for your specific need.

Planning for my dog

I was flipping through some of the older pictures of my two dogs. Jessie, the one on the right, passed away about 18 months ago. Kayla, the one on the left, is now about 10 years old. Her face is much whiter than when I first got her back in 2006.  The other day I started talking to the vet about the inevitable signs of aging that I am seeing in Kayla – hearing loss, arthritis, poor vision etc.   Then I realized that hey, I have got those signs too!  Before you know it, I started to think about what will happen to her when I kick the bucket.

Being an estate planning attorney, I am familiar with the tools for humans: trust, power of attorney, will, agent in fact etc.  When it comes to 4-legged animals, the principle is pretty much the same: You designate someone to continue to provide the care to them. You can have an informal agreement with a family member to care for them when you pass. Or you can set up a pet trust to formalize the arrangement.  Either way, someone has to step up and be willing to take the animal in. What if you don’t have that “someone”?  In Texas, we are fortunate to have a great veterinary school at Texas A&M University that runs an animal haven called Stevenson Companion Life-Care Center.  With a sizable donation, they will keep your furry family member there for the natural duration of his/her life.  Also, don’t forget to check with the place where you get your pet from.  Many reputable breeders, rescue groups or animal shelters would take the animal back regardless of his/her age.  For instance, I adopted Kayla from Golden Beginnings Golden Retriever Rescue in the Houston area. They have a life time commitment to their dogs.  I know that if I could not care for Kayla anymore, they will take her back to their program and find a spot for her.  May that be a foster home or permanent home, I know that she will be well cared for.

What about you? Do you have plans for your furry ones?