1. Trust is established utilizing funds belonging to disabled beneficiary
    Ex: Personal Injury Settlement or Inheritance
  2. Must be established prior to the beneficiary becoming 65 years old.
  3. Has a Payback provision whereby after the beneficiary’s death, the first successor beneficiary must be Medicaid for the amount that it paid to or on behalf of the beneficiary. The balance in the trust may be distributed to a beneficiary chosen by the person setting up the trust.
        If Mary is injured in a tragic car accident and receives a large settlement, she will no longer qualify for means tested government benefits. We would help Mary and her family set up a 1st Party Special Needs Trust which would hold the settlement proceeds, designate the State (Medicaid) to receive reimbursement at Mary’s death up to the amount that the State had paid for Mary’s benefit, and name another beneficiary(ies) to receive the balance of what remained in trust at Mary’s death.


  1. Trust is established utilizing funds belonging to someone other than the disabled beneficiary
    Ex: Parent, grandparent, friend, church
  2. Has no Payback provision. At the beneficiary’s death, the balance remaining in the trust may be distributed to any beneficiary chosen by the person setting up the trust.

This type of trust offers more benefit in that it both protects these assets, provides for the disabled loved one, and gets the residual left in the trust to a beneficiary chosen by the person setting up the trust, not to the government.

        If Grandmother Bealle is making a Last Will & Testament in which she is leaving each of seven grandchildren a portion of her estate, she becomes concerned that Mary will be left out because she does not want to cause Mary to lose benefits received from the government. Assume that Mary above in example under “1" is now 20 years post-accident and Grandmother Bealle was concerned that she could not leave Mary a portion of her estate, Grandmother Bealle could visit with us and we could establish a 3rd Party Special Needs Trust for Mary. This type of trust does not adversely affect Mary’s eligibility for her benefits.

3. ABLE Account

Originates in Federal Law and had broad bi-partisan support.
States have the option to authorize ABLE Accounts.

States may also contract with other states to provide ABLE accounts if their State does not elect to provide this type of account.

In December 2014 Congress finally acknowledged that people with disabilities cannot have a decent quality of life with limited financial resources and modest government support.

ABLE stands for “Achieving A Better Life Experience.” These are tax-free savings accounts to assist some people with disabilities while not jeopardizing their eligibility for Medicaid or Supplemental Security Income (SSI). The contributions would be in after-tax dollars but earnings would grow tax-free much like a Roth IRA.

These are very specific and legal counsel is suggested. This type of account is not the solution for every problem and sometimes, rather often times, a 3rd Party Special Needs Trust is a better solution. It is most accurate to say that an ABLE account is another tool in the tool box for assisting families in providing for a disabled loved one.

Some of the Specifics:

  1. Condition which disables beneficiary of account must begin prior to age 26. Hence, these accounts are not for older person who have a disability associated with advanced age. Strictly speaking the condition does not have to be diagnosed prior to age 26, but one would have to prove, presumably through physician’s records, that the condition existed prior to age 26.
  2. Family or friends may contribute up to $14,000 per year to this account.
  3. Resources within the account may be up to $100,000 before the beneficiary will become ineligible for SSI. The current allowed asset limit is $2,000 which has not changed since the 1980s.
  4. Resources within the account over $100,000 do not disqualify the beneficiary for the Medicaid benefit.
  5. A beneficiary can have only one ABLE account.
  6. Like a 1st Party Special Needs Trust, after the death of the account’s beneficiary, the first successor beneficiary must be the State to the extent that Medicaid has paid benefits to the original account beneficiary. This is commonly called a “Payback Provision.”

The Federal law (H.R. 647) can be found here:

Louisiana’s ABLE legislation is below in part, with a link to the remaining statutes.

LA. R.S. 46:1721

1721. Short title

           This Chapter shall be known and may be cited as the "Achieving a Better Life Experience in             Louisiana Act" or the "Louisiana ABLE Act".

Acts 2014, No. 93, §2.

1722. Definitions

        As used in this Chapter, the following terms have the meaning ascribed to them in this Section:

(1) "ABLE Account" means a special savings account for financing of certain qualified expenses of persons with disabilities as specifically provided in this Chapter.

(2) "ABLE Account Program" and "program" mean the special savings account program provided for in this Chapter.

(3) "Authority" means the ABLE Account Authority created by this Chapter to administer the ABLE Account Program.

(4) "Beneficiary" means the ABLE Account owner or the person entitled to apply the savings accrued in an ABLE Account, if not the account owner.

(5) "Department" means the Department of Health and Hospitals.

(6) "Person with a disability" means a person who meets either of the following criteria:

(a) 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 twelve months.

(b) Is blind.

(7) "Qualified disability expense" means any expense made for the benefit of a person with a disability who is a designated beneficiary as defined and specifically provided for in rules and regulations of the authority. Qualified disability expenses may include, without limitation, the following:

(a) Assistive technology and personal support service expenses for devices and services that facilitate maintenance of health, independence, and quality of life.

(b) Education expenses, including tuition for preschool through postsecondary education, which shall include higher education expenses and expenses for books, supplies, and educational materials related to preschool and secondary education, tutors, and special education services.

(c) Employment support expenses related to obtaining and maintaining employment, including jobrelated training, assistive technology, and personal assistance supports.

(d) Health, prevention, and wellness expenses including but not limited to the following, provided that the equipment and services listed in this Subparagraph conform with any applicable rules and regulations of the Department of Health and Hospitals and the Louisiana Rehabilitation Services program of the Louisiana Workforce Commission:

(i) Premiums for health insurance.

(ii) Medical, vision, dental, and mental healthcare expenses.

(iii) Habilitation and rehabilitation services.

(iv) Durable medical equipment.

(v) Therapy.

(vi) Respite care.

(vii) Long-term services and supports.

(viii) Nutritional management.

(ix) Communication services and devices, adaptive equipment, and assistive technology.

(x) Personal assistance.

(e) Housing expenses for a primary residence, including rent, purchase of a primary residence or an interest in a primary residence, mortgage payments, real property taxes, and utility charges.

(f) Miscellaneous expenses, including expenses for financial management and administrative services; legal fees; expenses for oversight; monitoring; home improvements, modifications, maintenance, and repairs at primary residence; and funeral and burial expenses.

(g) Transportation expenses, including the use of mass transit, the purchase or modification of vehicles, and moving expenses.

(h) Any other expenses which are consistent with the purposes of this Chapter, approved by the authority, and provided for in duly promulgated administrative rules.

Acts 2014, No. 93, §2.

§1723. ABLE Account Program; creation; purpose; legislative intent

   A. The ABLE Account Program is hereby created and shall be administered by the ABLE Account Authority, referred to hereafter as "authority" to encourage and assist individuals and families in saving private funds for the purpose of supporting persons with disabilities in endeavors to maintain health, independence, and quality of life.

   B. The purposes of the ABLE Account Program, referred to hereafter as the "program", include all of the following:

(1) To pay qualified disability expenses so that persons with disabilities may 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.

C.(1) It is the intention of the legislature that the program shall be treated in the same manner as a qualified tuition program defined in Section 529 of the federal Internal Revenue Code, as amended. Any provision of this Chapter determined to be in conflict with any requirement of the code as applicable to a qualified tuition program shall be superseded by such code provision to the extent necessary to assure that the program continues to meet requirements for tax-advantaged status in accordance with the code's definition of a qualified tuition program.

(2) Any requirement of this Chapter determined to be more restrictive than the requirements of the federal Internal Revenue Code as applicable to a qualified tuition program may be modified by the authority through rules promulgated in accordance with the Administrative Procedure Act to conform with code requirements.

Acts 2014, No. 93, §2.

{Read remainder of Revised Statutes By Clicking on Link}

Link to full text of Revised Statutes: http://www.legis.state.la.us/lss/lss.asp?doc=100400&showback=