ABLE Account Program Offered in New Hampshire – Updated Dec. 2017

ABLE Account Program Offered in New Hampshire

New Hampshire has partnered with the State of Ohio to offer ABLE accounts for New Hampshire residents under a new program called STABLE NH.  These accounts will be managed by Ohio’s STABLE program, which offers ABLE accounts to individuals with disabilities nationwide.  Although New Hampshire residents have been able to enroll in Ohio’s STABLE program since its inception, once STABLE NH launches, New Hampshire residents will be eligible to open STABLE NH accounts at discounted rates.  The program is expected to launch on December 15, 2017.  For updates, please check the website for the New Hampshire Governor’s Commission on Disability at https://www.nh.gov/disability/.

The ABLE account program allows eligible individuals with disabilities to own one tax-exempt investment account for the payment of qualified disability-related expenses.  ABLE account funds generally do not count toward income and resource limits for federal means-tested public benefits, such as Supplemental Security Income (SSI) and Medicaid, allowing money to be set aside and saved without jeopardizing eligibility for these benefits.  These accounts provide a measure of economic independence for individuals with disabilities.

2018 Estate and Gift Tax Limits

Under the federal estate and gift tax rules, there is a maximum amount of assets a person can transfer during life and at death without being subject to taxation.  The December, 2017 federal tax bill* doubled the prior combined estate and gift tax exemption amount for an individual from $5 million to $10 million for tax years beginning 2018 through 2025, indexed for inflation.  As a result, in 2018 an individual may be able to transfer an estimated $11.2 million in money or other assets to heirs without being subject to a federal estate or gift tax. This amount doubles for a married couple with proper planning.

2018 Annual Gift Tax Exclusion

In addition to the combined estate and gift tax exemption, in 2018 an individual can gift up to $15,000 annually, per gift-recipient, without reducing the overall estate tax exemption amount.  As an example, this annual gift tax exclusion would allow an individual to transfer $15,000 to each of her four children, and another $15,000 to each of her two nephews, for a total of $90,000 annually for these six recipients in 2018.  There is no limit as to how many $15,000 gifts a person can make in a year, as long as those gifts are to different individuals.  Those annual gifts that remain under the $15,000 limit will be disregarded entirely when calculating an individual’s gifting history for future estate tax purposes.  Married couples also are able to “split” gifts, meaning a married couple can double the impact of an annual tax-free gifting plan by giving $30,000 to each recipient starting in 2018.  Making annual gifts that qualify for gift tax exclusion allows a person, or a married couple, to systematically reduce the overall value of an estate and the exposure to a future estate tax at death.

Medicaid Nursing Facility Benefits

Gifts that satisfy the IRS annual tax-free gift exclusion often can interfere with an individual’s future Medicaid eligibility.  To be eligible for Medicaid nursing facility benefits, applicants may only have a certain amount of resources in their name.  Under the Medicaid rules, any gift made within a five-year period prior to a Medicaid application will be presumed to be for Medicaid planning purposes which then could result in a period of disqualification for Medicaid assistance to pay for nursing home care.  To put it in the most simplistic terms, individuals cannot give away their assets so they lack the funds to pay for their own nursing home care and then expect the Medicaid program to pay those bills.

To be eligible for Medicaid nursing facility benefits, single individuals may have only $2,500 in their name.  If the applicant is married, the applicant’s spouse is allowed to retain one-half of the couple’s countable resources, up to a maximum of $120,900 in 2017.  This number is scheduled to increase in January 2018, although the new figure has not yet been released.

*Since initial publication of this blog post, figures for the 2018 estate and gift tax limits were updated to reflect changes in the final tax bill passed in December of 2017.

 

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