Understanding Special Needs Trusts and ABLE Accounts for Financial Security
- Beverly Everson- Asberry
- Sep 3
- 3 min read
Navigating the financial landscape for special needs children and adults can feel overwhelming. As a parent or caregiver, it is crucial to secure a stable financial future for your loved ones. Two vital tools that can assist you in this journey are Special Needs Trusts (SNT) and ABLE accounts. In this article, we will explore these options, their benefits, and how they can work together to enhance financial security.
What is a Special Needs Trust?
A Special Needs Trust (SNT) is a legal arrangement designed to protect assets for a person with disabilities without affecting their eligibility for government benefits. This trust allows you to set aside specific funds for your loved one’s needs while ensuring access to important services like Medicaid and Supplemental Security Income (SSI).
For example, if a special needs child requires specialized therapy, an SNT can cover the costs, ensuring they have access to care not provided by government programs. Establishing an SNT can significantly improve the quality of life for individuals with disabilities without risking their vital support systems.
Benefits of Special Needs Trusts
The primary advantage of an SNT is that it safeguards the assets placed in the trust from being counted against your loved one’s eligibility for government assistance. In fact, according to recent studies, approximately 10 million Americans with disabilities rely on Medicaid, making asset protection especially critical.
Additionally, SNTs can be customized to meet the specific needs of the beneficiary. This flexibility allows for expenses such as education, employment support, and recreational activities to be budgeted effectively.
Moreover, an SNT offers peace of mind for caregivers. Knowing that funds are available to address your loved one's needs—a safety net for their future—is invaluable. Trustees can manage these funds wisely, ensuring they are used in the best interests of the beneficiary.
What are ABLE Accounts?
ABLE accounts, or Achieving a Better Life Experience accounts, are tax-return savings accounts designed for individuals with disabilities. These accounts allow savings without impacting eligibility for government benefits.
As of 2025, individuals can contribute up to $19,000 per year to their ABLE account, offering a straightforward way to save. The funds can then be utilized for a wide range of qualified expenses, including education, housing, transportation, and healthcare. This significant flexibility positions ABLE accounts as an excellent complement to Special Needs Trusts.
Benefits of ABLE Accounts
One key advantage of ABLE accounts is the significant tax benefits they provide. Money in an ABLE account grows tax-free, and withdrawals for qualified expenses are also tax-free. For example, if you save and invest $10,000 in an ABLE account, that could translate into a considerable financial cushion, depending on your investment strategy.
Moreover, ABLE accounts are easy to set up and manage. You can open an account at various financial institutions, making it accessible for families. The simple processes involved allow special needs children and adults to gain more independence in managing their finances.
How to Use Special Needs Trusts and ABLE Accounts Together
Combining Special Needs Trusts and ABLE accounts can form a robust financial strategy for your loved one. An SNT can hold larger assets and provide long-term support, while an ABLE account is perfect for covering everyday expenses and addressing short-term needs.
For instance, if your child receives a small inheritance, placing it in a SNT protects the asset for future use while using an ABLE account for immediate expenses like educational materials or recreational activities. This balanced approach ensures your loved one has access to necessary resources without losing eligibility for government programs.
Your Path to Financial Security
Understanding Special Needs Trusts and ABLE accounts is essential for providing financial security for special needs children and adults. Together, these tools create a comprehensive financial plan tailored to your loved one’s specific needs.
As a caregiver or parent, your proactive approach can greatly impact their future. Take the time to explore these options, consult with a financial advisor, and set your loved one on the path to a secure and fulfilling life.
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