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California’s ABLE account program was launched in December 2018.  An ABLE account can do some amazing things for those who qualify; yet not enough people know about the program, understand the program and sadly, are not signing up for the program.


An ABLE account is similar to a 529 education savings account.  Money in an ABLE account grows tax free and is tax free when withdrawn if used for Qualified Disability Expenses (spoiler – most anything can be a qualified disability expense).

Currently, up to $15,000 per year can be deposited.  For SSI recipients the maximum balance for an account is $100,000, but for those on Medi-Cal only the limit jumps to $529,000!  ABLE accounts can even be funded with your child’s earnings (up to $12,060 per year).  529 education accounts can even be rolled over into an ABLE account.


One strategy is to actually build up an educational 529 account before funding the ABLE account.  The reasons for this are: (a) the money can be rolled over later; (b) there is no Medi-Cal payback for funds in a 529 plan; and, (c) the money can also be used for other children’s educational expenses if needed.

Another strategy is to use a Special Needs Trust to fund the ABLE account because payments for food or shelter from an ABLE account will not cause a 1/3 reduction of SSI benefits.  That reduction would be almost $3,400 per year!

There are many other specific strategies for other unique situations.


Because ABLE accounts are new, existing Special Needs Trusts do not have language permitting a Trustee to make distributions to an ABLE account.  This is one reason why establishing a revocable Third Party SNT now makes good sense.  Not only can it be leveraged by using the ABLE account, it also will allow other family members to gift or bequeath money to the SNT.

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