Smart Planning With SNTs and ABLE Accounts

ABLE Accounts

An ABLE account, short for Achieving a Better Life Experience, is a tax advantaged savings account designed for those with disabilities to save for expenses without affecting their eligibility for government benefits. These accounts were established under federal legislation but are administered at the state level. In California, they are referred to as CalABLE accounts.

To be eligible, applicants must have a significant disability that began before their 26th birthday. Those over 26 can still open an account if their disability onset occurred before age 26. Efforts are ongoing to raise the age limit, but the current rules remain in effect.

If an applicant already receives SSI or SSDI benefits, they automatically qualify for CalABLE. If not, they must meet the Social Security Administration’s definition of significant functional limitations and provide certification from a licensed physician.

ABLEs Versus SNTs

ABLE accounts and Special Needs Trusts serve distinct purposes, each with unique features. Here are four key differences that you will need to understand as you consider or actually begin establishing either:

Limits

ABLE accounts have a $100,000 asset cap before SSI benefits are suspended. This is a significant improvement over the $2,000 SSI asset limit but still requires careful management. Conversely, SNTs have no asset cap, making them more flexible for larger inheritances or gifts.

Use Of Funds

ABLE accounts can cover any Qualified Disability Expense (QDE), including shelter, which can apply to rent or mortgage payments without directly affecting SSI eligibility On the other hand, SNTs do not have any inherent spending limitations (the monies can be spent on anything, not just QDEs), but distributions for rent or cash can be treated as income, potentially reducing benefits.

Contributions

ABLE contributions are capped at the annual gift tax exclusion limit $19,000 in 2025 from all sources combined. SNTs allow for unlimited contributions, though gift and estate tax implications may apply.

Medicaid Payback

ABLE accounts are frequently subject to Medicaid recovery upon the beneficiary’s death after covering specific expenses. Third party SNTs are not subject to Medicaid payback, meaning funds can pass to other designated beneficiaries in their entirety, preserving more of the assets for use by loved ones.

Both tools undoubtedly provide critical financial support, but ABLE accounts function like special savings accounts with defined limits and benefits. SNTs offer broader, long term resource management options. Each serves different needs depending on the beneficiary’s circumstances.

Rebecca Sommer, founder of The Law Office of Rebecca Sommer in California, is a trusted authority in estate planning. She has a deep focus on special needs planning that she's used to help numerous families navigate the intricacies of ABLE accounts and Special Needs Trusts. Rebecca's tailored strategies provide clarity and long term stability for loved ones with disabilities.

Ready to create a personalized plan that secures your family’s future? Contact The Law Office of Rebecca Sommer today for expert guidance.

Choosing Between An ABLE Account And An SNT

One of the greatest beauties of ABLEs and SNTs is that you do not have to choose between them. In fact, having both can be a smart strategy. If you qualify for an ABLE account, it’s likely worthwhile to set up both because they complement each other quite well.

For example, in 2025, the monthly Supplemental Security Income payment with a California state supplement is around $1,207 for a single person living independently with a qualifying disability. As anyone living in California knows, that amount is far from enough to cover rent. The advantage of an ABLE account is that funds can be used for shelter expenses, like rent, without reducing SSI benefits something that typically isn’t allowed with direct payments from an SNT.

One approach many have taken is to use the SNT to hold and manage larger sums of money and the SNT can periodically transfer funds into the ABLE account. This way, the ABLE account can be used for rent, mortgage payments or similar shelter expenses without negatively affecting SSI benefits. It’s imperative you structure everything correctly to avoid unintentional violations of SSI rules.

Combining these two financial tools, you or your loved one can maximize financial resources while maintaining eligibility for vital government benefits. It’s an easy, secure way to ensure long term stability and a better quality of life, even when you might not be around to provide direct support for your loved ones.

How An Estate Planning Attorney Can Help Utilize These Resources

An estate planning attorney can play a crucial role in integrating ABLE accounts and Special Needs Trusts into your estate plan and ensure financial stability for your loved one with special needs. This is a specialized and complex area, making professional guidance all the more important.

An attorney will ensure that your SNT is properly structured with terms that meet legal requirements while also reflecting your goals. They’ll aim to do more than just preserve government benefits they’ll create a plan that truly supports your beneficiary’s overall well being. For example, if no close relatives live nearby but there are supportive family members in other areas, an attorney can structure your trust to include provisions to fund travel expenses for visits. A well drafted trust can account for even these kinds of details.

An estate planning attorney can also help you navigate the interaction between an SNT and an ABLE account. Since this area is so niche, you’ll need guidance on how to fund each, where to allocate different types of assets, and how to maximize the benefits of both tools to ensure long term financial security. An estate planning attorney will do all of this and more.

More than this, they will also provide you with insight into spending rules. Special needs planning involves strict regulations about how funds can be used without jeopardizing benefits. Rules change such as the 2024 update that allows food expenses without reducing SSI benefits so having an attorney who stays up to date on these changes is invaluable. They can also help avoid pitfalls, such as ensuring ABLE account funds are spent within the same month they are withdrawn to prevent them from being counted as a resource.

Another key area is ensuring the proper distribution of assets among multiple heirs. Families often struggle with balancing support for a special needs loved one while also providing for other children or relatives. Estate planning attorneys, often working alongside tax and financial professionals, can help create a fair and effective plan that accounts for the needs of all of your beneficiaries.

Still Have Questions? Ready To Get Started?

For more information on Smart Planning With SNTs and ABLE Accounts, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (657) 571-1241 today.