ABLE Account vs. Special Needs Trust: What’s the Difference?
- Purple
- Aug 20
- 2 min read
If you’re supporting someone with a disability—or planning for your own financial future—you’ve probably come across two tools designed to help: the ABLE account and the Special Needs Trust (SNT).
Both are powerful ways to protect eligibility for benefits while saving money—but they serve different purposes. In this article, we’ll explain:
What an ABLE account is
What a Special Needs Trust is
How they differ
When to use one, the other, or both
How Purple fits into your financial toolkit
1. What Is an ABLE Account?
An ABLE account (Achieving a Better Life Experience) is a tax-advantaged savings account for people with disabilities. It allows you to save money without counting against the $2,000 asset limit for SSI and Medicaid.
To qualify, the disability must have started before age 26. In 2025, you can contribute up to $19,000, plus more if you’re working through the ABLE to Work provision. Funds grow tax-free and can be used for disability-related expenses like rent, food, transportation, assistive technology, and more.
ABLE accounts are owned and controlled by the person with the disability. They’re simple to open, and easy to use for everyday financial needs.
2. What Is a Special Needs Trust?
A Special Needs Trust (SNT) is a legal arrangement that holds and manages money for someone with a disability without affecting their eligibility for benefits.
Unlike ABLE accounts, there’s no age restriction. Trusts can hold unlimited assets and are often used to manage inheritances, legal settlements, or gifts from family. A trustee—not the beneficiary—controls the funds and must approve all spending.
There are two main types:
First-party SNTs: funded with the beneficiary’s own assets (e.g., a settlement or backpay)
Third-party SNTs: funded by someone else (e.g., a parent or grandparent), often used for long-term estate planning
3. How Are They Different?
Here are the key distinctions:
Eligibility: ABLE accounts require the disability to start before age 26; trusts do not.
Ownership: ABLE accounts are managed by the individual; trusts are controlled by a trustee.
Contribution limits: ABLE accounts have an annual cap; trusts do not.
Flexibility: ABLE accounts are ideal for everyday use; trusts are better for long-term or large-sum planning.
Medicaid payback: ABLE accounts and first-party trusts both require Medicaid payback after death; third-party trusts generally do not.
4. Can You Use Both?
Yes—and many families do.
Using both allows you to get the best of both worlds:
A Special Needs Trust can hold large sums of money and provide long-term protection
An ABLE account can be used for day-to-day spending and give the person with a disability more financial independence
Trustees often transfer small amounts from a trust into an ABLE account, allowing the beneficiary to make their own purchases for qualifying expenses without risking benefits.
5. How Purple Helps
Purple is building tools designed specifically for people with disabilities and their families. While we don’t replace legal trusts, we do help you:
Open and manage disability-focused checking accounts
Organize spending, savings, and backpay
Track balances, receipts, and documents
Keep records clean for SSA compliance
Plan for the future with confidence
We’re also working to bring integrated ABLE account features to Purple in partnership with state and banking partners. Stay tuned.