Families supporting a loved one with a disability often hear about both ABLE accounts and supplemental needs trusts as ways to save money without jeopardizing government benefits. They serve related purposes but work quite differently, and many families benefit from using both rather than choosing just one.
What an ABLE account is
An ABLE account, named for the federal Achieving a Better Life Experience Act, is a tax-advantaged savings account available to individuals whose disability began before age 46 (the SECURE 2.0 Act raised the age-of-onset limit from 26 to 46 effective January 1, 2026). Funds in an ABLE account, up to an annual contribution limit tied to the federal gift tax annual exclusion ($19,000 in 2026), can be used for qualified disability expenses, and the balance generally does not count against the strict resource limit for Medicaid, and for SSI the first $100,000 is disregarded. The account can be opened and largely controlled by the individual with the disability, their parent, or another authorized person, offering a level of independence and simplicity a trust doesn't always provide.
What a supplemental needs trust is
A supplemental needs trust, sometimes called a special needs trust, is a legal trust designed to hold assets for the benefit of a person with a disability without disqualifying them from means-tested government benefits. Unlike an ABLE account, a supplemental needs trust has no dollar cap on how much it can hold, and it can be funded with an inheritance, a personal injury settlement, or contributions from family members over time. Our special needs trust guide covers the different types available in New York and how each is structured.
Key differences that matter for planning
- Contribution limits: ABLE accounts have annual and total balance caps; supplemental needs trusts generally do not.
- Age of onset: ABLE accounts require the disability to have begun before a certain age; supplemental needs trusts have no such requirement.
- Control: ABLE account funds can often be accessed directly by the beneficiary for qualified expenses; trust funds are managed by a trustee, which adds oversight but less day-to-day flexibility.
- Cost to establish: ABLE accounts are inexpensive and quick to open; trusts require legal drafting and, for certain types, court or Medicaid agency involvement.
- Medicaid payback: Both can be subject to Medicaid payback provisions upon the beneficiary's death, depending on the type and funding source, so neither should be assumed to pass automatically to other family members.
Why many families use both
An ABLE account can be a good place for smaller, everyday savings and for money the individual wants some independent control over, while a supplemental needs trust is typically the better vehicle for larger sums, such as an inheritance or settlement, that need professional management and don't fit within ABLE's contribution caps. These tools also connect to broader family planning; grandparents and other relatives drafting wills should be told directly to leave inheritances to the trust rather than to the individual, a coordination issue we explore further in our related article on special needs trusts and inheritance planning.
Getting the structure right
Choosing between, or combining, an ABLE account and a supplemental needs trust depends on the family's specific goals, the size of the funds involved, and the beneficiary's current benefits. Our special needs planning services help New York families sort through these options and build a plan that protects benefits while still providing real financial support.
If you're trying to decide which tool, or combination of tools, is right for your family, we're happy to walk through it with you. Contact us for a free consultation or call +1 212 518 3868.
