Special Needs Planning in North Carolina: Your Guide to ABLE Accounts

Does your child or close loved one have special needs? If so, it is crucial that you speak with an attorney who understands the special estate planning needs you may have. Leaving money or property directly to the benefit of a special needs individual could undermine their eligibility for important government benefits, including Medicaid.

The good news is that there are options available. A special needs trust (SNT) is an effective estate planning tool. Another potential option is something called an ABLE account. In this blog post, our Monroe estate planning attorneys provide an overview of ABLE accounts in North Carolina.

Special Needs People Can Save More Money With an ABLE Account

Generally, individuals with disabilities must have very low income and assets to qualify for public benefits such as Medicaid and Supplemental Security Income. Due to this low asset requirement, many special needs individuals face significant financial challenges while trying to maintain benefits eligibility. The Achieving a Better Life Experience (ABLE) Act of 2014 was passed to help address this issue. The federal law lets individual states set up a tax-advantaged type of savings account called an ABLE account. Through an ABLE account, a person with special needs can save money to be put towards qualifying disability-related expenses.

ABLE Accounts: Qualified Disability Expenses (QDEs)

The ABLE law defines “qualified disability expenses” or “QDEs” in a relatively broad manner. In effect, most day-to-day living expenses are QDEs. A special needs individual can use an ABLE account to save money to put towards any of the following:

  • Medical costs;
  • Wellness care costs;
  • Educational costs;
  • Rent/housing costs; and
  • Personal support services (medical and non-medical).

North Carolina has an ABLE Program—Must Follow Federal Requirements

As of 2021, more than 40 states have set up ABLE programs for their special needs residents, including North Carolina. You can create an ABLE account for a special needs child or loved one in North Carolina. As long as you satisfy the federal requirements, their ABLE account savings will be tax-advantaged and not counted against them for the Medicaid/Social Security eligibility. Here are three key things to know about the federal rules for ABLE accounts:

  1. Anyone can deposit money on behalf of a special needs loved one. An ABLE account owner can put money in their own account and/or a family or friend can deposit funds on their behalf.
  2. The annual deposit limit is $15,000 for each ABLE account. All contributions combined cannot exceed $15,000 in a given year (2021).
  3. For Supplemental Security Income (SSI) recipients, ABLE accounts are capped at $100,000. If they have more than $100,000 in their ABLE account, they could lose SSI eligibility.

Call Our North Carolina Estate Planning Lawyers Today

At Perry, Bundy, Plyler & Long, LLP, our North Carolina estate planning attorney has the professional skills and legal experience to help families with the full range of special needs planning issues. If you have questions about ABLE accounts, we can help. Contact us now for a confidential review of your case. From our Monroe law office, we provide estate planning representation throughout Union County, including in Matthews, Stallings, Wingate, Indian Trail, and Hemby Bridge.