This month, Arizona became the 33rd state to launch an ABLE program. The Arizona ABLE program, named AZ ABLE, is administered through a partnership with Ohio STABLE Accounts, which are backed by Intuition ABLE Solutions, LLC, and will be managed by Vanguard Group, Inc. and Fifth Third Bank.
AZ ABLE allows individuals with disabilities with onset before age 26 to save up to $15,000 a year in an ABLE account without jeopardizing their eligibility for federally-funded means tested benefits, such as Supplemental Security Income (SSI) and Medicaid. If the individual works, they may be eligible to contribute an additional $12,060 a year from earnings. The funds in the account grow income tax free and can be used for disability-related expenses that assist the beneficiary in increasing and/or maintaining his or her health, independence or quality of life. Further, distributions for disability-related expenses, which is broader than one might think, do not impact eligibility for means tested benefits, such as SSI. The individual can have up to $100,000 in the ABLE account and continue to receive SSI benefits. The individual with the disability, their parent, or agent under power of attorney may establish and manage the account.
Millions of individuals with disabilities and their families are often relegated to a life of poverty as a result of not being allowed to build even the most modest levels of financial resources. Individuals receiving supports through Social Security, Medicaid and other publicly-funded programs are often disqualified from those supports if they have more than $2,000 worth of resources or assets. Now, with ABLE programs, individuals with disabilities and their families will be able to take a step to better secure their financial futures and to help offset the often significant financial challenges that can accompany living with a disability.
Like other ABLE programs across the country, the Arizona ABLE program has minimal costs associated with establishing and maintaining an ABLE account (which can be completed online and takes about 15 minutes). The Arizona ABLE program has an annual account fee of $42, charged on a monthly basis ($3.50/month). Fees associated with investment options range from 0.19% – 0.34%.
An ABLE account can be a valuable tool in the toolkit of special needs planning. It allows the individual with a disability to save up money without losing benefits. It also allows family and friends to give money without affecting benefits. Of particular note, an ABLE account can be used in conjunction with a special needs trust or third party supplemental care trust to facilitate payments for shelter expenses that, unlike the same shelter payments from a first or third party special needs trust, does not cause a presumed 1/3 reduction in the SSI benefit. Note, if you are the Trustee of a Special Needs Trust for an Arizona beneficiary that was disabled prior to age 26 you should seek legal advice on ABLE accounts as a potential additional planning tool.
For more information on the Arizona ABLE program and how to enroll, please visit http://az-able.com. Please also call our office for a free initial consultation to answer all your estate planning, special needs planning, special needs trusts, public benefits, and guardianship and conservatorship questions.