Know the Law: Can We Establish a STABLE Account for My Son?

Chris Paul Headshot
Christopher R. Paul
Director and Vice-Chair, Trusts & Estates Department
Published: Union Leader
February 12, 2018

Q: I have a disabled son who was injured in an accident and he has his own special needs trust created with proceeds from his settlement. Can he use assets from the trust to fund a STABLE account? 

A: Yes, if your son is otherwise eligible, funds in his trust ($15,000 annually, subject to total contribution limits) can be transferred to his STABLE Account (New Hampshire’s version of ABLE accounts). To be eligible, a beneficiary must be blind or “sufficiently disabled” from a condition that began prior to age 26. The “sufficiently disabled” requirement is satisfied if the person is receiving SSDI or other similar benefits, or the person provides a “disability certification” accompanied by a doctor’s written statement certifying that the person was sufficiently disabled prior to age 26.

Other persons can contribute to his STABLE account as well, and such transfers qualify for the annual gift tax exclusion. An individual can have only one STABLE account.

STABLE accounts resemble Section 529 plans. Contributions to and earnings and distribution from a STABLE account for “qualified disability expenses” are not taxable, and do not affect most means-tested benefits including SSI. Qualified disability expenses include the following: education, housing, transportation, employment training, assistive technology, health, financial management and administrative services, legal fees, and funeral and burial expenses. Social Security has stated that STABLE distributions can also be used for “basic living expenses, such as food, rent, and utilities.”

Please note that all STABLE accounts must have a “payback provision” on the death of the beneficiary of the dates back to the date the account was established. STABLE programs allow funds remaining in the account at the death of the beneficiary to be used first to pay for final expenses and the burial of the beneficiary. This differs from the “payback to Medicaid” requirements of his special needs trust, which requires payback for all Medicaid services, even prior to the establishment of the trust.

While this may not be important in your son’s case, it can have significant implications if a third party funds his account.

STABLE accounts appear to be a wonderful new option for certain disabled individuals, but may not be for everyone. The rules are technical and complex and are still being developed; a misstep can result in penalties or disqualification. You and your son would be well-advised to seek the advice of an experienced elder law attorney.