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Estate Planning with a child who is disabled - use of the ABLE account

Posted by Joseph C. Creen | Jun 22, 2017 | 0 Comments

Estate planning for a parent of a disabled child under the age of 26 years, especially if the child is on, or likely to apply for,  SSI or Medicaid,  should include discussion and possible use of the Iowa A.B.L.E. accounts. 

An ABLE account can be set up for a person with disability (who is disabled by age 26), even if the person is on SSI or Medicaid.  Under current rules, the funds that are deposited into the ABLE account are not counted for resources purposes, and currently do not cause a risk of losing SSI or Medicaid. Withdrawals or payments from the account, for approved expenses,  are “not counted” as income for disability purposes.

The approved expenses that can be paid out of that ABLE account include housing, transportation, education, health, prevention wellness, financial management, legal fees, oversight and monitoring, funeral and burial expenses, technology and personal support services, and other expenses that are approved. However, if money is withdrawn from the ABLE account for expenses that are not approved, then the withdrawals are included as income and might affect the disabled child's eligibility for  SSI or Medicaid eligibility for that particular month. 

A parent, family or others could establish the account for the disabled child and can put money into the account at the rate of $14,000 per year (up to a maximum of $100,000).  If the ABLE account has more than $100,000,  then the account could affect SSI eligibility.

The income of earnings in the account are tax free.  The account would not pay income taxes on the investments that are earned. Contributions to the account might be deductible from the gross income of the giver under the Iowa tax law.  There is a deduction maximum.

Investment of the account is limited to about six investment options plus a checking account.

There is free  additional information available on the Iowa State Treasurer web site or call 1-888-609-8910 . The Iowa website: 

 Joe Creen

About the Author

Joseph C. Creen

Professional License and Admitted to practice in these Courts: Iowa Supreme Court (since 1975) Illinois Supreme Court (since 1975) Federal Court Southern District of Iowa (since 1975) Federal Court Northern District of Iowa (since 1982) Federal Court Central District of Illinois (since 1989) Federal Eighth Circuit Court of Appeals (since 1989) Education: Drake University Law School (JD 1975) University of Notre Dame (BA 1971) National College of Trial Advocay 1989 Professional Memberships: Iowa Association of Justice (since 1975) American Association of Justice (since 1975) American Bar Association (since 1975) Iowa Bar (since 1975) Illinois Bar (since 1975) Scott County Iowa Bar Association Real Property, Trust, and Estate Law of American Bar Tort Trial and Litigation Section of American Bar American Arbitration Association (prior arbitrator) Community Involvement: H.E.L.P Legal Aide board member (current member) Our Lady of Victory Foundation Inc (founding board member, current board member and Secretary) Our Lady of Victory Parish Pastoral Council and Board of Education (past member and past President) Scott County Catholic School Advisory Council (current member and Secretary) Scott County Bar Assoc Executive Council (past member) A founder board member and coach on of Future Lady Knights (current board member and VP) Iowa Coaching Authorization (current) Areas of Practice: Personal Injury Litigation: Brain and Body Injury Contract , Construction & Commercial Litigation Real Estate Litigation Consumer Protection Real Estate Transactions Business Planning and Transactions Estate Planning and Asset Protection Wills, Trusts and Probate Non-Profit Law


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