ABLE ACCOUNT, THIRD PARTY SPECIAL NEEDS TRUST AND POOLED TRUST: COMPARE
by: Begley Law Group
by Thomas D. Begley, Jr., Esquire, CELA
Below is a chart comparing an ABLE Account with a Third-Party Special Needs Trust and Pooled Trust.
| ABLE ACCOUNT | THIRD PARTY SPECIAL NEEDS TRUST OR POOLED TRUST | |
| Onset of Disability |
Qualifying disability exists prior to age 46
|
No requirement but not usually used unless beneficiary is disabled |
| Age of Beneficiary upon Establishment
|
No requirement | No requirement |
|
Who May Establish
|
Beneficiary, parent, guardian, agent | Anyone except beneficiary |
|
Number of Accounts
|
One per beneficiary | Unlimited |
|
Fees
|
Financial institution fees | Attorney and trustee fees |
| Contribution Limits |
$20,000 per year; SSI payments suspended when assets total $100,000
|
Unlimited |
| Investment Options |
Investment strategies may be changed twice annually
|
No restrictions |
| Valid Distributions |
Broadly defined “disability expenses,” including basic living expenses |
Any expenses for benefit of beneficiary, with certain implications for distributions for shelter
|
| Taxes | Income earned on the account is tax-free |
Can use a variety of planning strategies to minimize taxes that may be due. Proper drafting and advice will help to minimize tax concerns.
|
|
Medicaid Payback Upon Death of Beneficiary
|
Remaining funds must reimburse state for Medicaid benefits. This is a huge disadvantage for larger accounts. | No payback |