When you plan for the financial future of a loved one with disabilities in New York, you often face two options: Special Needs Trusts and ABLE Accounts. Both allow you to manage assets without affecting government benefits like Medicaid or SSI eligibility. This post explains their differences and helps you decide which fits your needs based on New York laws.
What is a Special Needs Trust?
A Special Needs Trust (SNT) lets you set aside funds for a person with disabilities. You can use these funds for expenses like education or therapy without affecting their benefits. In New York, you, a family member or a guardian can establish an SNT, and a trustee manages it. The New York State Bar Association notes that SNTs offer flexibility for long-term planning.
What is an ABLE Account?
An ABLE Account is a tax-advantaged savings option for individuals with disabilities. You can save up to $18,000 annually in New York (as of 2025) without affecting Medicaid or SSI eligibility. You can use it for expenses such as housing or healthcare. Setting it up takes just an online application, making it simpler than an SNT.
Key differences
To help you weigh these options, consider these distinctions:
- Eligibility: Your loved ones qualify for an ABLE Account if their disability began before age 26; SNTs have no age limit.
- Funding limits: You can contribute $18,000 annually to an ABLE Account, with a $100,000 cap for SSI eligibility. SNTs have no limits, which is ideal for more significant sums.
- Setup and management: An SNT requires legal help and a trustee, which raises costs. You can manage an ABLE Account yourself or through a representative.
- Tax benefits: Your ABLE Account grows tax-free; your SNT’s tax status varies by structure.
These points show that ABLE Accounts suit more straightforward needs, while SNTs handle more significant assets.
Which option fits your situation?
Your choice depends on your circumstances. If your loved one’s disability started before age 26 and you want an easy, low-cost option, open an ABLE Account. If you manage substantial funds or the disability begins later, create an SNT. Consider consulting a lawyer experienced in special needs planning in New York to help you decide.