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Wednesday, January 07, 2015

The Achieving a Better Life Experience Act of 2014

The Achieving a Better Life Experience Act (the ABLE Act) was recently signed into law and a number of questions have been raised regarding what the ABLE Accounts can do, and when can they be used.  Keep in mind, the law was recently enacted.  The accounts will not be available for several months.  Like any new law, there will be a great deal of information that will be developed from the agencies tasked with administering this new law.  In the case of the ABLE Act it will be from both the Internal Revenue Service and the Social Security Administration clarifying the details and raising more questions.

How do I set up an ABLE Account?

What can we use an ABLE Account for?

How many ABLE accounts can we have?

Does an ABLE Account replace the need for a First Party Special Needs Trust?

Does an ABLE Account replace the need for a Third Party Special Needs Trust?

The Text of the Bill follows the questions.

How do I set up an ABLE Acct?
The bill has only recently been signed into law, now the IRS has to promulgate regulations which then will be used by the various States to create the programs much like 529 College savings plans.  Only after those programs are in place can an ABLE Account be established. Here is what we know so far, it appears that ABLE accounts must be established in the State where the beneficiary resides, or from which State they receive Medicaid benefits. As of December 29, 2014 these accounts are not yet available, it will likely take 12 months before ABLE Accounts are available.  Until the regulations are promulgated we will not know how the accounts can be established.  Very likely though, they will be established much like 529 College plans where a “responsible party” establishes the account for a specific “designated beneficiary”.  Unlike 529 Plans, each designated beneficiary can have only one (1) ABLE Account. This is because only the first $100,000.00 in an ABLE account is disregarded for Medicaid and SSI resource counting purposes.  Having only one account will assist the agencies in tracking and accounting countable resources.  If an account exceeds $100,000.00; the excess will be counted toward the resource limit.  An unusual thing that ABLE allows though is a suspension of SSI benefits rather than a loss of benefits requiring a reapplication.  How this will be done in practice is as yet undetermined. 

What can we use an ABLE Account for?
The IRS will promulgate regulations that will clarify what can be paid for by an ABLE account.  The law states that the purpose is to pay for “disability-related expenses” that will supplement and not supplant other benefits.  The supplement and not supplant language is similar to special needs trusts, but the new wrinkle is the “disability-related” expenses.  The Act defines The term `qualified disability expenses' means any expenses related to the eligible individual's blindness or disability which are made for the benefit of an eligible individual who is the designated beneficiary, including the following expenses: education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and other expenses, which are approved by the Secretary under regulations and consistent with the purposes of this section.  The only other mention of what the ABLE funds can be used for is a discussion of income tax treatment of the distributions, such that if a distribution is made for other than disability related expenses there will be a 10% tax penalty.  This appears to pattern after the 529 College plans except that instead of education based expenses, it refers to disability related expenses.  Until the IRS promulgates regulations we cannot answer definitively what can be paid but it seems reasonable that unreimbursed medical expenses, therapies, assistive devices, vehicle modifications, unreimbursed home care, and home modifications are likely to be included.  If paying family members for personal care will be allowed will be up to the regulations.

Can parents set up an ABLE account for a child with a disability and grandparents set up a different account for the same child with a disability?
No, the ABLE Act specifically states that there can be only one account per beneficiary.  Any subsequent ABLE Accounts will not be treated as ABLE accounts.  Thus they will be counted as available resources.

How much can be deposited into an ABLE account for a child with a disability?
There is a limit equal to the current year’s annual gift tax exemption amount, currently $14,000. This is an aggregate limit, meaning the total gifts in any calendar year to the trust cannot exceed $14,000. If a grandparent contributes $10,000 to the ABLE account, that leaves only $4000 which other people can contribute.

Does an ABLE Account replace the need for a First Party Special Needs Trust?
In certain circumstances it can.  An ABLE Account can replace some small D4a Special Needs Trusts (also referred to as Self Settled Special Needs Trusts) as well as may replace the need for some Community or Pooled Special Needs Trusts.  It does not replace the need for Third Party Settled Special Needs Trusts (sometimes referred to as Supplemental Needs Trusts).  If a person who qualifies for an ABLE Account receives an inheritance or a windfall which would be characterized as “first-party” money, that would push them over the $2000 resource cap, but not exceed the annual gift exemption amount (currently $14000/yr, aggregated) and they have, or can open an ABLE account, to which they can deposit the windfall and not exceed $100,000.00, then the ABLE Account can replace the need for a Self Settled Special Needs Trust or a Pooled Trust Account.  Please note the specific conditions where this applies, it is wise to get a thorough evaluation by a qualified special need trust practitioner to determine what the best option would be given any particular set of circumstances. First-party money is subject to “payback” regardless whether a D4a Special Needs Trust or a First Party Settled account at a Pooled Trust.  All ABLE accounts are required to pay to Medicaid any amounts remaining in the account upon death of the beneficiary up to the amount Medicaid spent on the beneficiary, regardless of the source of the funds in the ABLE Account. This is a major departure from the comparison to 529 College plans, those plans have no pay-back requirements. If a parent, grandparent, or anyone for that matter, decides to contribute money for the qualified individual with a disability, that money is subject to the payback requirement. There are times when using an ABLE account will be helpful in gifting scenarios which would not require a trust but cannot go directly to the beneficiary. If the amounts in question exceed $100,000.00  (or may be limited by the $14,000 annual deposit limit) then a First Party Settled Special Needs Trust will still be needed.

Does an ABLE Account replace the need for a Third Party Settled Special Needs Trust?
ABLE does not replace the use of a Third Party Settled Special Needs Trust (3rd PSNT).  3rd PSNTs are used to set assets aside for a beneficiary that may or may not need public benefit programs such as SSI and Medicaid. An ABLE account can only be established for an individual whose disability started prior to age 26 as established by the Social Security Administration. There is no limit on the amount of funds that can be set aside in a 3rd PSNT.  An ABLE account cannot exceed $100,000.00 without reducing/suspending SSI. A beneficiary can have multiple 3rd PSNTs.  A beneficiary can have only one ABLE Account. 3rd PSNTs can be the beneficiary of life insurance policies, retirement accounts, Wills, and other Trusts. An ABLE account cannot be a designated beneficiary to life insurance policies, retirement accounts, Wills, and other Trusts.  A 3rd PSNT can move to different States or simply remain in the original State. ABLE accounts must roll over from one ABLE account to another following yet to be determined regulations. 3rd PSNT can open accounts at any financial institution willing to open accounts for trusts and is able to invest in a wide variety of investments. ABLE accounts can only be created by States and have specific limited investment opportunities. The grantor of a 3rd PSNT selects who will manage the assets and make distributions with wide latitude for distributions to “supplement and not supplant” public benefits. It is unclear how expenditures will be made from ABLE accounts. The 3rd PSNT has broader discretion what can be paid for by the trust, not limited to “disability related expenses”. The 3rd PSNT can provide for unreimbursed disability related expenses as well as life enhancing benefits, entertainment and if it turns out the beneficiary does not need SSI or Medicaid, can provide for additional benefits. There is no age restriction for creating a 3rd PSNT. There is no requirement to establish the qualifying disability started prior to the age of 26. ABLE accounts can only be established for individuals who can prove to the satisfaction of the IRS and the SSA that the disabling condition started prior to the age of 26.

 

BELOW IS TEXT OF THE BILL FROM THOMAS.GOV

Included here is only the section of the bill related to ABLE Accounts.  As is often the case, the bill was used to move some other pieces of legislation through the process and was attached to this act.

Mark Biernath

Attorney

Nadler Biernath LLC

Copyright December 2014, All rights reserved

 

TITLE I--QUALIFIED ABLE PROGRAMS

SEC. 101. PURPOSES.

The purposes of this title are as follows:

(1) To encourage and assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities to maintain health, independence, and quality of life.

(2) To provide secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, the Medicaid program under title XIX of the Social Security Act, the supplemental security income program under title XVI of such Act, the beneficiary's employment, and other sources.

SEC. 102. QUALIFIED ABLE PROGRAMS.

(a) In General- Subchapter F of chapter 1 is amended by inserting after section 529 the following new section:

`SEC. 529A. QUALIFIED ABLE PROGRAMS.

`(a) General Rule- A qualified ABLE program shall be exempt from taxation under this subtitle. Notwithstanding the preceding sentence, such program shall be subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable organizations).

`(b) Qualified ABLE Program- For purposes of this section--

`(1) IN GENERAL- The term `qualified ABLE program' means a program established and maintained by a State, or agency or instrumentality thereof--

`(A) under which a person may make contributions for a taxable year, for the benefit of an individual who is an eligible individual for such taxable year, to an ABLE account which is established for the purpose of meeting the qualified disability expenses of the designated beneficiary of the account,

`(B) which limits a designated beneficiary to 1 ABLE account for purposes of this section,

`(C) which allows for the establishment of an ABLE account only for a designated beneficiary who is a resident of such State or a resident of a contracting State, and

`(D) which meets the other requirements of this section.

`(2) CASH CONTRIBUTIONS- A program shall not be treated as a qualified ABLE program unless it provides that no contribution will be accepted--

`(A) unless it is in cash, or

`(B) except in the case of contributions under subsection (c)(1)(C), if such contribution to an ABLE account would result in aggregate contributions from all contributors to the ABLE account for the taxable year exceeding the amount in effect under section 2503(b) for the calendar year in which the taxable year begins.

For purposes of this paragraph, rules similar to the rules of section 408(d)(4) (determined without regard to subparagraph (B) thereof) shall apply.

`(3) SEPARATE ACCOUNTING- A program shall not be treated as a qualified ABLE program unless it provides separate accounting for each designated beneficiary.

`(4) LIMITED INVESTMENT DIRECTION- A program shall not be treated as a qualified ABLE program unless it provides that any designated beneficiary under such program may, directly or indirectly, direct the investment of any contributions to the program (or any earnings thereon) no more than 2 times in any calendar year.

`(5) NO PLEDGING OF INTEREST AS SECURITY- A program shall not be treated as a qualified ABLE program if it allows any interest in the program or any portion thereof to be used as security for a loan.

`(6) PROHIBITION ON EXCESS CONTRIBUTIONS- A program shall not be treated as a qualified ABLE program unless it provides adequate safeguards to prevent aggregate contributions on behalf of a designated beneficiary in excess of the limit established by the State under section 529(b)(6). For purposes of the preceding sentence, aggregate contributions include contributions under any prior qualified ABLE program of any State or agency or instrumentality thereof.

`(c) Tax Treatment-

`(1) DISTRIBUTIONS-

`(A) IN GENERAL- Any distribution under a qualified ABLE program shall be includible in the gross income of the distributee in the manner as provided under section 72 to the extent not excluded from gross income under any other provision of this chapter.

`(B) DISTRIBUTIONS FOR QUALIFIED DISABILITY EXPENSES- For purposes of this paragraph, if distributions from a qualified ABLE program--

`(i) do not exceed the qualified disability expenses of the designated beneficiary, no amount shall be includible in gross income, and

`(ii) in any other case, the amount otherwise includible in gross income shall be reduced by an amount which bears the same ratio to such amount as such expenses bear to such distributions.

`(C) CHANGE IN DESIGNATED BENEFICIARIES OR PROGRAMS-

`(i) ROLLOVERS FROM ABLE ACCOUNTS- Subparagraph (A) shall not apply to any amount paid or distributed from an ABLE account to the extent that the amount received is paid, not later than the 60th day after the date of such payment or distribution, into another ABLE account for the benefit of the same designated beneficiary or an eligible individual who is a family member of the designated beneficiary.

`(ii) CHANGE IN DESIGNATED BENEFICIARIES- Any change in the designated beneficiary of an interest in a qualified ABLE program during a taxable year shall not be treated as a distribution for purposes of subparagraph (A) if the new beneficiary is an eligible individual for such taxable year and a member of the family of the former beneficiary.

`(iii) LIMITATION ON CERTAIN ROLLOVERS- Clause (i) shall not apply to any transfer if such transfer occurs within 12 months from the date of a previous transfer to any qualified ABLE program for the benefit of the designated beneficiary.

`(D) OPERATING RULES- For purposes of applying section 72--

`(i) except to the extent provided by the Secretary, all distributions during a taxable year shall be treated as one distribution, and

`(ii) except to the extent provided by the Secretary, the value of the contract, income on the contract, and investment in the contract shall be computed as of the close of the calendar year in which the taxable year begins.

`(2) GIFT TAX RULES- For purposes of chapters 12 and 13--

`(A) CONTRIBUTIONS- Any contribution to a qualified ABLE program on behalf of any designated beneficiary--

`(i) shall be treated as a completed gift to such designated beneficiary which is not a future interest in property, and

`(ii) shall not be treated as a qualified transfer under section 2503(e).

`(B) TREATMENT OF DISTRIBUTIONS- In no event shall a distribution from an ABLE account to such account's designated beneficiary be treated as a taxable gift.

`(C) TREATMENT OF TRANSFER TO NEW DESIGNATED BENEFICIARY- The taxes imposed by chapters 12 and 13 shall not apply to a transfer by reason of a change in the designated beneficiary under subsection (c)(1)(C).

`(3) ADDITIONAL TAX FOR DISTRIBUTIONS NOT USED FOR DISABILITY EXPENSES-

`(A) IN GENERAL- The tax imposed by this chapter for any taxable year on any taxpayer who receives a distribution from a qualified ABLE program which is includible in gross income shall be increased by 10 percent of the amount which is so includible.

`(B) EXCEPTION- Subparagraph (A) shall not apply if the payment or distribution is made to a beneficiary (or to the estate of the designated beneficiary) on or after the death of the designated beneficiary.

`(C) CONTRIBUTIONS RETURNED BEFORE CERTAIN DATE- Subparagraph (A) shall not apply to the distribution of any contribution made during a taxable year on behalf of the designated beneficiary if--

`(i) such distribution is received on or before the day prescribed by law (including extensions of time) for filing such designated beneficiary's return for such taxable year, and

`(ii) such distribution is accompanied by the amount of net income attributable to such excess contribution.

Any net income described in clause (ii) shall be included in gross income for the taxable year in which such excess contribution was made.

`(4) LOSS OF ABLE ACCOUNT TREATMENT- If an ABLE account is established for a designated beneficiary, no account subsequently established for such beneficiary shall be treated as an ABLE account. The preceding sentence shall not apply in the case of an account established for purposes of a rollover described in paragraph (1)(C)(i) of this section if the transferor account is closed as of the end of the 60th day referred to in paragraph (1)(C)(i).

`(d) Reports-

`(1) IN GENERAL- Each officer or employee having control of the qualified ABLE program or their designee shall make such reports regarding such program to the Secretary and to designated beneficiaries with respect to contributions, distributions, the return of excess contributions, and such other matters as the Secretary may require.

`(2) CERTAIN AGGREGATED INFORMATION- For research purposes, the Secretary shall make available to the public reports containing aggregate information, by diagnosis and other relevant characteristics, on contributions and distributions from the qualified ABLE program. In carrying out the preceding sentence an item may not be made available to the public if such item can be associated with, or otherwise identify, directly or indirectly, a particular individual.

`(3) NOTICE OF ESTABLISHMENT OF ABLE ACCOUNT- A qualified ABLE program shall submit a notice to the Secretary upon the establishment of an ABLE account. Such notice shall contain the name and State of residence of the designated beneficiary and such other information as the Secretary may require.

`(4) ELECTRONIC DISTRIBUTION STATEMENTS- For purposes of section 4 of the Achieving a Better Life Experience Act of 2014, States shall submit electronically on a monthly basis to the Commissioner of Social Security, in the manner specified by the Commissioner, statements on relevant distributions and account balances from all ABLE accounts.

`(5) REQUIREMENTS- The reports and notices required by paragraphs (1), (2), and (3) shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by the Secretary.

`(e) Other Definitions and Special Rules- For purposes of this section--

`(1) ELIGIBLE INDIVIDUAL- An individual is an eligible individual for a taxable year if during such taxable year--

`(A) the individual is entitled to benefits based on blindness or disability under title II or XVI of the Social Security Act, and such blindness or disability occurred before the date on which the individual attained age 26, or

`(B) a disability certification with respect to such individual is filed with the Secretary for such taxable year.

`(2) DISABILITY CERTIFICATION-

`(A) IN GENERAL- The term `disability certification' means, with respect to an individual, a certification to the satisfaction of the Secretary by the individual or the parent or guardian of the individual that--

`(i) certifies that--

`(I) the individual has a medically determinable physical or mental impairment, which results in marked and severe functional limitations, and which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, or is blind (within the meaning of section 1614(a)(2) of the Social Security Act), and

`(II) such blindness or disability occurred before the date on which the individual attained age 26, and

`(ii) includes a copy of the individual's diagnosis relating to the individual's relevant impairment or impairments, signed by a physician meeting the criteria of section 1861(r)(1) of the Social Security Act.

`(B) RESTRICTION ON USE OF CERTIFICATION- No inference may be drawn from a disability certification for purposes of establishing eligibility for benefits under title II, XVI, or XIX of the Social Security Act.

`(3) DESIGNATED BENEFICIARY- The term `designated beneficiary' in connection with an ABLE account established under a qualified ABLE program means the eligible individual who established an ABLE account and is the owner of such account.

`(4) MEMBER OF FAMILY- The term `member of the family' means, with respect to any designated beneficiary, an individual who bears a relationship to such beneficiary which is described in subparagraph section 152(d)(2)(B). For purposes of the preceding sentence, a rule similar to the rule of section 152(f)(1)(B) shall apply.

`(5) QUALIFIED DISABILITY EXPENSES- The term `qualified disability expenses' means any expenses related to the eligible individual's blindness or disability which are made for the benefit of an eligible individual who is the designated beneficiary, including the following expenses: education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and other expenses, which are approved by the Secretary under regulations and consistent with the purposes of this section.

`(6) ABLE ACCOUNT- The term `ABLE account' means an account established by an eligible individual, owned by such eligible individual, and maintained under a qualified ABLE program.

`(7) CONTRACTING STATE- The term `contracting State' means a State without a qualified ABLE program which has entered into a contract with a State with a qualified ABLE program to provide residents of the contracting State access to a qualified ABLE program.

`(f) Transfer to State- Subject to any outstanding payments due for qualified disability expenses, upon the death of the designated beneficiary, all amounts remaining in the qualified ABLE account not in excess of the amount equal to the total medical assistance paid for the designated beneficiary after the establishment of the account, net of any premiums paid from the account or paid by or on behalf of the beneficiary to a Medicaid Buy-In program under any State Medicaid plan established under title XIX of the Social Security Act, shall be distributed to such State upon filing of a claim for payment by such State. For purposes of this paragraph, the State shall be a creditor of an ABLE account and not a beneficiary. Subsection (c)(3) shall not apply to a distribution under the preceding sentence.

`(g) Regulations- The Secretary shall prescribe such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this section, including regulations--

`(1) to enforce the 1 ABLE account per eligible individual limit,

`(2) providing for the information required to be presented to open an ABLE account,

`(3) to generally define qualified disability expenses,

`(4) developed in consultation with the Commissioner of Social Security, relating to disability certifications and determinations of disability, including those conditions deemed to meet the requirements of subsection (e)(1)(B),

`(5) to prevent fraud and abuse with respect to amounts claimed as qualified disability expenses,

`(6) under chapters 11, 12, and 13 of this title, and

`(7) to allow for transfers from one ABLE account to another ABLE account.'.

(b) Tax on Excess Contributions-

(1) IN GENERAL- Subsection (a) of section 4973 (relating to tax on excess contributions to certain tax-favored accounts and annuities) is amended by striking `or' at the end of paragraph (4), by inserting `or' at the end of paragraph (5), and by inserting after paragraph (5) the following new paragraph:

`(6) an ABLE account (within the meaning of section 529A),'.

(2) EXCESS CONTRIBUTION- Section 4973 is amended by adding at the end the following new subsection:

`(h) Excess Contributions to ABLE Account- For purposes of this section--

`(1) IN GENERAL- In the case of an ABLE account (within the meaning of section 529A), the term `excess contributions' means the amount by which the amount contributed for the taxable year to such account (other than contributions under section 529A(c)(1)(C)) exceeds the contribution limit under section 529A(b)(2)(B).

`(2) SPECIAL RULE- For purposes of this subsection, any contribution which is distributed out of the ABLE account in a distribution to which the last sentence of section 529A(b)(2) applies shall be treated as an amount not contributed.'.

(c) Penalty for Failure to File Reports- Section 6693(a)(2) is amended by striking `and' at the end of subparagraph (D), by redesignating subparagraph (E) as subparagraph (F), and by inserting after subparagraph (D) the following:

`(E) section 529A(d) (relating to qualified ABLE programs), and'.

(d) Records- Section 552a(a)(8)(B) of title 5, United States Code, is amended--

(1) in clause (viii), by striking `or' at the end;

(2) in clause (ix), by adding `or' at the end; and

(3) by adding at the end the following new clause:

`(x) matches performed pursuant to section 3(d)(4) of the Achieving a Better Life Experience Act of 2014;'.

(e) Other Conforming Amendments-

(1) Section 26(b)(2) is amended by striking `and' at the end of subparagraph (W), by striking the period at the end of subparagraph (X) and inserting `, and', and by inserting after subparagraph (X) the following:

`(Y) section 529A(c)(3)(A) (relating to additional tax on ABLE account distributions not used for qualified disability expenses).'.

(2) Section 877A is amended--

(A) in subsection (e)(2) by inserting `a qualified ABLE program (as defined in section 529A),' after `529),', and

(B) in subsection (g)(6) by inserting `529A(c)(3),' after `529(c)(6),'.

(3) Section 4965(c) is amended by striking `or' at the end of paragraph (6), by striking the period at the end of paragraph (7) and inserting `, or', and by inserting after paragraph (7) the following new paragraph:

`(8) a program described in section 529A.'.

(4) The heading for part VIII of subchapter F of chapter 1 is amended by striking `higher education' and inserting `certain'.

(5) The item in the table of parts for subchapter F of chapter 1 relating to part VIII is amended to read as follows:

`Part VIII. Certain Savings Entities.'.

(6) The table of sections for part VIII of subchapter F of chapter 1 is amended by inserting after the item relating to section 529 the following new item:

`Sec. 529A. Qualified ABLE programs.'.

(7) Paragraph (4) of section 1027(g) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5517(g)(4)) is amended by inserting `, 529A' after `529'.

(f) Effective Date-

(1) IN GENERAL- The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

(2) REGULATIONS- The Secretary of the Treasury (or the Secretary's designee) shall promulgate the regulations or other guidance required under section 529A(g) of the Internal Revenue Code of 1986, as added by subsection (a), not later than 6 months after the date of the enactment of this Act.

SEC. 103. TREATMENT OF ABLE ACCOUNTS UNDER CERTAIN FEDERAL PROGRAMS.

(a) Account Funds Disregarded for Purposes of Certain Other Means-Tested Federal Programs- Notwithstanding any other provision of Federal law that requires consideration of 1 or more financial circumstances of an individual, for the purpose of determining eligibility to receive, or the amount of, any assistance or benefit authorized by such provision to be provided to or for the benefit of such individual, any amount (including earnings thereon) in the ABLE account (within the meaning of section 529A of the Internal Revenue Code of 1986) of such individual, any contributions to the ABLE account of the individual, and any distribution for qualified disability expenses (as defined in subsection (e)(5) of such section) shall be disregarded for such purpose with respect to any period during which such individual maintains, makes contributions to, or receives distributions from such ABLE account, except that, in the case of the supplemental security income program under title XVI of the Social Security Act--

(1) a distribution for housing expenses (within the meaning of such subsection) shall not be so disregarded, and

(2) in the case of such program, any amount (including such earnings) in such ABLE account shall be considered a resource of the designated beneficiary to the extent that such amount exceeds $100,000.

(b) Suspension of SSI Benefits During Periods of Excessive Account Funds-

(1) IN GENERAL- The benefits of an individual under the supplemental security income program under title XVI of the Social Security Act shall not be terminated, but shall be suspended, by reason of excess resources of the individual attributable to an amount in the ABLE account (within the meaning of section 529A of the Internal Revenue Code of 1986) of the individual not disregarded under subsection (a) of this section.

(2) NO IMPACT ON MEDICAID ELIGIBILITY- An individual who would be receiving payment of such supplemental security income benefits but for the application of paragraph (1) shall be treated for purposes of title XIX of the Social Security Act as if the individual continued to be receiving payment of such benefits.

(c) Effective Date- This section shall take effect on the date of the enactment of this Act.

SEC. 104. TREATMENT OF ABLE ACCOUNTS IN BANKRUPTCY.

(a) Exclusion From Property of the Estate- Section 541(b) of the title 11, United States Code, is amended--

(1) in paragraph (8), by striking `or' at the end;

(2) in paragraph (9), by striking the period at the end and inserting a semicolon and `or'; and

(3) by inserting after paragraph (9) the following:

`(10) funds placed in an account of a qualified ABLE program (as defined in section 529A(b) of the Internal Revenue Code of 1986) not later than 365 days before the date of the filing of the petition in a case under this title, but--

`(A) only if the designated beneficiary of such account was a child, stepchild, grandchild, or stepgrandchild of the debtor for the taxable year for which funds were placed in such account;

`(B) only to the extent that such funds--

`(i) are not pledged or promised to any entity in connection with any extension of credit; and

`(ii) are not excess contributions (as described in section 4973(h) of the Internal Revenue Code of 1986); and

`(C) in the case of funds placed in all such accounts having the same designated beneficiary not earlier than 720 days nor later than 365 days before such date, only so much of such funds as does not exceed $6,225.'.

(b) Debtor's Monthly Expenses- Section 707(b)(2)(A)(ii)(II) of title 11, United States Code, is amended by adding at the end `Such monthly expenses may include, if applicable, contributions to an account of a qualified ABLE program to the extent such contributions are not excess contributions (as described in section 4973(h) of the Internal Revenue Code of 1986) and if the designated beneficiary of such account is a child, stepchild, grandchild, or stepgrandchild of the debtor.'.

(c) Record of Debtor's Interest- Section 521(c) of title 11, United States Code, is amended by inserting `, an interest in an account in a qualified ABLE program (as defined in section 529A(b) of such Code,' after `Internal Revenue Code of 1986)'.

(d) Effective Date- The amendments made by this section shall apply with respect to cases commenced under title 11, United States Code, on or after the date of the enactment of this Act.

SEC. 105. INVESTMENT DIRECTION RULE FOR 529 PLANS.

(a) Amendments Relating to Investment Direction Rule for 529 Plans-

(1) Paragraph (4) of section 529(b) is amended by striking `may not directly or indirectly' and all that follows and inserting `may, directly or indirectly, direct the investment of any contributions to the program (or any earnings thereon) no more than 2 times in any calendar year.'.

(2) The heading of paragraph (4) of section 529(b)is amended by striking `NO' and inserting `LIMITED'.

(b) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2014.


Tuesday, March 13, 2012

Spread The Word To End The Word

Spread The Word To End The Word

Community Leaders from Best Buddies and the Special Olympics have combined to create a campaign to end the use of the word “retard”. March 7, 2012 marked the day to stop using the r-word in any form of speech including medical terminology.

The website, www.r-word.org, describes how the terms “medical retardation” and “mental retardation” began as medical terminology with specific clinical connotation but those words have shifted into every day conversation with a hurtful meaning. Using the r-word to individuals with disabilities or their families and friends has lasting effects.

The efforts of the campaign have made some incredible progress. The American Medical Association has announced that they recommend “editorial revisions” to certain medical documents by deleting the term “mentally retarded” and inserting “individuals with intellectual disabilities”. Even though the revisions have to be approved, it is still a positive step toward erasing the r-word from our vocabulary.

For more information including articles and videos or if you would like to make the pledge to stop using the r-word visit the organization’s website at: www.r-word.com.

This blog entry serves as educational purposes only and does not constitute legal advice.


Tuesday, February 07, 2012

Misappropriating Trust Funds

There are serious consequences if a trustee misappropriates trust funds.

An example of this recently occurred in Port St. Lucie, Florida. John Morgan was arrested on a grand theft charge for reportedly stealing more than $40,000 from his adult daughter’s special needs trust fund. His daughter, Sandra Morgan, who suffers from cerebral palsy and lives in a group home, was awarded $65,000 from a settlement due to a wheel chair accident that resulted in injury. Reports indicate that Morgan spent the money on personal items such as bills and purchasing a new car. Police said Morgan spent a total of $40,966.56 of his daughter’s money for his personal benefit.

For full story link here.

This blog entry serves as educational purposes only and does not constitute legal advice.


Monday, January 16, 2012

Stem Cell Fraud

The use of the World Wide Web has allowed families with special needs individuals to discover new therapy techniques, medical breakthroughs, doctors, and lawyers to ensure that the individual lives the best life possible. While there is a wealth of beneficial information on the internet there are also scam artists that target families with special needs individuals.

One form of these scam artists is described in the video below. An American born doctor that lost his license to practice medicine in the United States has set up a stem cell laboratory in South America. He now benefits from charging thousands of dollars to families that will try everything to improve the quality of life for their loved ones with special needs.

Click here to view the story on CBS News.

This blog entry serves as educational purposes only and does not constitute legal advice.


Monday, November 28, 2011

How A Special Needs Trust Benefits

Special needs planning is the concept of leaving assets for your child with special needs in such a way that does not render them ineligible for benefits. As you may know, Medicaid and Social Security Income have resource limits. If the individual has more than $2000 in “countable resources” then he or she is not eligible on the financial side to receive Medicaid or SSI.

But the good news is, there are specialized legal tools that we can use in order to protect the assets for a special needs individual. A special needs trust allows a special needs individual to receive assets and his or her Medicaid or SSI benefits will not be effected.

This blog entry serves as educational purposes only and does not constitute legal advice.


Monday, November 28, 2011

Do I Have An Estate Plan?

Did you know that every single person has an estate plan!

The State creates an Estate plan for you. Below is outlined what the State creates for every one:

  • If you are married and have one child, 1/2 to your spouse and 1/2 to your child.
  • If you have more than one child, 1/3 to your spouse, and 2/3 to your children equally.
  • If you are not married but have children, equally to your children.

This plan is not ideal for every individual because many families today are blended, including second marriages or children from past relationships. If an individual uses just the estate plan the State executes then assets may not be divided properly within the blended families. This is why an estate plan tailored to the individual is essential!

This blog entry serves as educational purposes only and does not constitute legal advice.

 

 




Nadler Biernath LLC assists clients in the Atlanta, Georgia area and throughout Georgia including Kennesaw, Alpharetta, Roswell, Marietta, Buckhead, Johns Creek, Duluth, East Cobb and Dunwoody.



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4360 Chamblee Dunwoody Rd, Suite 500, Atlanta, GA 30341
| Phone: 770-455-0535

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