Special Needs Trust or ABLE Account? A Virginia Special Needs Planning Attorney Helps You Decide.

Families with disabled loved ones have had to walk a very fine line for many years. There is often a delicate balance between providing their family member with the most comfortable life possible, while also ensuring that extra assets or income don’t jeopardize their loved one’s eligibility to receive essential government benefits like Medicaid and Supplemental Security Income (SSI).

For years, the most effective way to achieve this balance was to set up a Special Needs Trust.  But, in 2014, the federal Achieving a Better Life Experience (ABLE) Act created Internal Revenue Code Section 529A, which authorizes each State to offer tax-advantaged savings accounts for the disabled.

The plan works similarly to Section 529 college savings plans. The ABLE Act allows family members and others to make cash contributions to a qualified beneficiary’s ABLE account. The annual contribution amount is limited to the federal gift tax annual exclusion amount which is currently will be increasing to $15,000 in 2018.

The account grows tax-free and earnings may be withdrawn tax-free as long as they are used to pay “qualified disability expenses.” Qualified disability expenses include health care, education, housing, transportation, employment training, assistive technology, personal support services, financial management or legal services.

In most cases, an ABLE account won’t affect the beneficiary’s eligibility for Medicaid and SSI. However, distributions from an ABLE account used to pay housing expenses are countable assets. Also, if the balance of the ABLE account grows beyond $100,000, eligibility for SSI is suspended until the balance is brought below that threshold.

At this point, you may be wondering which would be better for your situation…or perhaps if you need BOTH tools to get the most out of your special needs plan. It’s really best to seek the advice of a qualified Special Needs Lawyer to discuss your unique circumstances. But, here’s a quick comparison to help guide you.


ABLE accounts are available only if your home state offers them or contracts with another state to make them available. Luckily, Virginia does offer them. In fact, Virginia was the first state to offer ABLE Accounts in 2015.

Age Restrictions

As previously stated, ABLE account beneficiaries must have become disabled before age 26. There are no age restrictions for Third Party Special Needs Trusts.

Qualified Expenses

ABLE accounts can be used to pay only specific types of expenses. Special Needs Trusts may be used to pay for “quality of life” expenses such as travel, recreation, entertainment and hobbies.


An ABLE account’s earnings and qualified distributions are tax-free.  A Special Needs Trust’s earnings are taxable.

There are many other considerations to examine that may impact your choice, so it is best to work with an experienced Special Needs Trust Lawyer who can help guide you based on you and your loved one’s unique circumstances. If you’d like assistance getting started, we invite you to contact the Law Office of Sheri R. Abrams at (571) 328-5795 to schedule an appointment.