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How We Actually Use ABLE Act Accounts

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How we actually use ABLE Act accounts

We’ve written and talked about ABLE Act accounts before. But we’d like to revisit the subject with a very practical update. Let’s answer the question: how do we actually use ABLE Act accounts in our practice today?

Start with a recap: what’s ABLE?

Before we get practical, though, we do need to review the concepts. Congress adopted The Achieving a Better Life Experience Act (the ABLE Act) in 2014. Arizona created its version of ABLE in 2018. By now, there are over 1,500 individuals with accounts in the Arizona program. There are probably a few hundred others signed up under other states’ plans (participants don’t have to use their own state’s plan).

But how are those individuals actually using their accounts? There are a few hints evident in the data, and some suggestions from our law practice.

What does the average account look like?

Arizona’s average ABLE Act account size is a little over $10,000. That’s consistent with most other states. Accounts around the country vary from a little less than $5,000 (Alabama) to almost $12,500 (Pennsylvania). That suggests that the accounts are not, by and large, being used for investment management.

Of course, the maximum annual contribution to an ABLE Act account is $17,000 (this year). That means that the maximum possible account size would be about $125,000 for someone who aggressively maxed out the contribution amounts since accounts were first available. But there aren’t very many accounts of that size in any of the states.

Most of the reports we hear from clients and caretakers are consistent. Most ABLE Act accounts collect smaller deposits and see regular disbursements. In other words, the accounts are usually used for flexibility in expenditures, rather than savings.

Of course, some participants do use the accounts to save up for a significant purchase (a vehicle, or even a computer, wheelchair or adaptive equipment, for instance). They also can make it easier for family members to make birthday or holiday gifts (think of your grandmother’s annual $50 check or gift card).

The ABLE Act supercharges a special needs trust

Here’s what we see most often and how we usually use the ABLE Act: it makes a terrific adjunct to a special needs trust. Say, for instance, that the trustee of a special needs trust wants to help pay for the beneficiary’s housing expenses. If the trustee pays these directly, Supplemental Security Income (SSI) payments should be reduced. But transferring money to an ABLE Act account can allow the beneficiary to pay their own housing expenses and keep their full SSI benefit.

And there’s an added bonus: the beneficiary gets to take charge of some of their own expenses. That can help maximize autonomy and self-determination. Even the beneficiary who can’t handle finances can benefit in a similar way by allowing parents or guardians to make regular payments at a lower administrative cost compared to the special needs trust’s professional trustee.

The exact mechanics vary from one special needs trust (and related ABLE Act account) to another. That, in fact, is one of the strengths of the interplay: the arrangement can be customized for each beneficiary’s maximum benefit.

Sometimes we encourage a parent or guardian to establish an ABLE Act account so that they can take charge of paying at least some of the regular monthly bills. That can save money and enhance individual control. And if it doesn’t work as well as we anticipated, the arrangement can be modified — or ended — as each case might require.

ABLE can help with excess funds in the beneficiary’s name

We often see two kinds of problems arise:

  1. A beneficiary on SSI or long-term care Medicaid (in Arizona, ALTCS) may accumulate income from their monthly disability checks. For both SSI and ALTCS, the general rule (warning: there are lots of exceptions — but we’re trying to simplify, not complicate, here) limits them to $2,000 in available resources. That includes bank accounts, cash under the mattress, and all sorts of other things.
  2. Often, an SSI or ALTCS beneficiary works a few hours a week and accumulates earnings that can actually be hard to spend. Or that same beneficiary might want to save up earnings for a significant purchase and finds the $2,000 limit too difficult to work with.

In both of those kinds of cases, the “excess” funds in the beneficiary’s account (or their representative payee account) can often be moved into an ABLE Act account. Problem solved!

What ABLE doesn’t work well for

When ABLE was first proposed (and, ultimately, adopted) the general view was that it would be a less-expensive alternative to special needs trusts. It just hasn’t worked out that way. Why not? Two main reasons:

  1. The maximum contribution amount is too low. Unless your estate will be less than $17,000, for instance, you can’t name your child’s ABLE Act account as beneficiary on your own bank account or retirement account. Forget the tax consequences or the cost savings — the excess contribution will simply be rejected.
  2. The payback requirement is onerous. Even if you could leave your stock or bank account to your child’s ABLE Act account, you’d be setting up a mandatory payback to the state for Medicaid payments. Some states have indicated that they intend to waive that requirement, but Arizona is not among them. And you can’t choose an account from a state that forgoes the payback — that only works for beneficiaries living in their state. So putting any significant amount of your money into your child’s ABLE Act account is probably a bad idea. And not just a not-very-good idea, but a really, really bad idea.

How can you address these shortcomings? It’s actually pretty straightforward. Anyone with a disabled child (or grandchild, or other beneficiary) should be considering a special needs trust to hold any inheritance. And that trust should specifically authorize the trustee to make ABLE Act contributions if they make sense.

How can we help?

Recent changes to the ABLE Act rules have made it more attractive to use these accounts as we’ve described here. Think you might be a good candidate for enhanced management through an ABLE Act account? Talk to your special needs or estate planning attorney about how you might benefit from some of these ideas and approaches. We look forward to these conversations.

And so do most other attorneys who do any significant amount of special needs planning. Like members of the Special Needs Alliance — a national network of lawyers who know what they’re talking about in this (tightly focused) arena. The rules are complicated, but we can help simplify them for you.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

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Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.