Estate planning involves arranging who will receive your assets and handle your responsibilities after your death or if you become incapacitated. Estate planning becomes particularly important if you have a dependent with disabilities.
The financial needs of a person with disabilities may exceed what public assistance programs provide. An ABLE (Achieving a Better Life Experience) account can fill that gap.
Understanding the ABLE account
An ABLE account is a tax-advantaged savings account designed for individuals with disabilities and their families. Federal legislation created ABLE accounts, and Maryland adopted them. These accounts let you save funds for the future needs of a person with disabilities without jeopardizing essential government benefits. These accounts supplement benefits provided through Medicaid, SSI and other sources, rather than replacing them.
Eligibility for an ABLE account
To open an ABLE account, the individual with disabilities must have experienced the onset of a disabling condition before turning 26. A doctor must document that they expect the condition to last at least 12 consecutive months.
Benefits of an ABLE account
An ABLE account provides several benefits to enhance a Maryland estate plan:
- Tax advantages: The account’s earnings grow tax-free, and you will not pay taxes on withdrawals for qualified disability expenses.
- Asset protection: The funds in the account usually do not count against asset limits for federal benefits like Medicaid and SSI.
- Flexibility: You can spend the funds on a broad range of disability-related expenses, including education, housing, transportation and healthcare.
Each of these benefits contributes to the security and well-being of individuals with disabilities, offering them financial stability without losing essential public benefits.
An ABLE account is a critical tool that can play an essential role in your Maryland estate plan, especially if you care for a dependent with disabilities. By understanding how it works, you can make informed decisions that ensure the financial well-being of your loved one with disabilities.