March 23, 2017

ABLE United Key Question Series: What happens if the individual passes away?

ABLE United Key Question Series: What happens if the individual passes away?

In this blog series, we’re highlighting the top five questions our customer service team mostly frequently receives. In this final blog post, let’s discuss:

What happens to the funds after the beneficiary passes away?

The beneficiary of an ABLE United account is the individual with the disability and the owner of the account. They may have someone oversee the account as an administrator, such as a parent, guardian, or an authorized individual under power of attorney. Regardless of who is administering the account, it’s important to note that outstanding qualified disability expenses, including funeral and burial, can be paid after death of the beneficiary.

If the beneficiary was not receiving Medicaid benefits, the funds in the account would be included in the beneficiary’s gross estate for federal estate tax purposes.

If the beneficiary was receiving Medicaid benefits, a state may request reimbursement for Medicaid benefits paid after the establishment of the ABLE United account. For example, if an individual received Medicaid benefits for 30 years, opens an ABLE United account today and unfortunately passes away two days later, the state may only request reimbursement for those two days of Medicaid expenses. Then, any remaining funds in the account would be included in the beneficiary’s gross estate.

The claim that Medicaid might request can be reduced based on premiums paid by, or on behalf of, the account owner to a Medicaid Buy-In program under Title XIX of the Social Security Act. Unlike First Party Special Needs Trusts, a state is considered a creditor of the account and not a beneficiary. We recommend contacting ABLE United at 1-888-524-ABLE (2253) if you are aware that an ABLE account holder has passed away.

Thank you for following this blog series on common questions. We hope the information provided has been helpful and has given you a better understanding of ABLE United.