As wealth managers, we’re continuously evaluating new legislation and its impact on our clients’ financial plans. President Trump’s One Big Beautiful Bill (OBBB), signed into law on July 4, 2025, has made some notable changes to the landscape of special needs planning. While the bill’s primary focus is on broader tax cuts and economic policy, its provisions directly affect the strategies used by families with loved ones with disabilities. Adjustments to ABLE Accounts The OBBB primarily impacts special needs planning through its modifications to the Achieving a Better Life Experience (ABLE) Act. The ABLE Act, which was already a cornerstone of modern special needs planning, has been significantly enhanced, offering new opportunities for families. The most impactful change is the expansion of ABLE Act eligibility. Previously, an individual’s disability had to have an onset before age 26 to qualify for an ABLE account. The OBBB raises this age limit to 46, effective January 1, 2026. This change opens up ABLE accounts as a powerful tool for a much larger demographic, including individuals who acquired a disability later in life due to accidents, illness, or other circumstances. For 2025, the annual contribution limit is $19,000, with employed beneficiaries potentially able to contribute more. Contributions to an ABLE account are now eligible for the federal Saver’s Credit, which rewards lower-income workers for saving. Funds in an ABLE account grow tax-free and withdrawals for qualified disability expenses (QDEs) are also tax-free. The bill permanently allows tax-free rollovers from 529 education savings plans into ABLE accounts up to the contribution limit for that year. Increase to Estate and Gift Tax Exemption Another key provision is the increase in the estate and gift tax exemption. The OBBB permanently raises the individual exemption to $15 million (indexed annually for inflation), or $30 million for a married couple. While not a direct change to special needs planning tools, this provision is crucial for families, as it increases the amount of wealth that can be passed down without incurring federal estate taxes. This allows for larger, more robust funding of special needs trusts. For families, these changes don’t replace the need for a Special Needs Trust (SNT) but rather make the ABLE account a powerful complementary tool. Previously, the modest contribution limits of ABLE accounts, tied to the annual gift tax exclusion (currently $19,000), made them less significant for families with substantial assets. A special needs trust (SNT) remains the primary vehicle for housing large sums of money for an individual with special needs without jeopardizing their eligibility for means-tested government benefits like Medicaid and Supplemental Security Income (SSI). The SNT, with its ability to hold unlimited assets, can serve as the “legacy” fund. Now, with the expanding eligibility, an ABLE account can function as a “checking account” for daily living expenses. Unlike SNTs, ABLE accounts allow for tax-free distributions to cover certain housing and food costs without impacting SSI benefits. This makes them ideal for day-to-day needs, while the SNT can be used for larger, less frequent expenditures such as travel, specialized therapies, or home modifications. The OBBB’s provisions allow for a more nuanced and flexible approach to managing your loved one’s finances. 
Navigating the New Landscape With these changes, it’s more important than ever to review your special needs plan. We recommend considering the following: Fund Both: Instead of choosing between an SNT and an ABLE account, leverage the strengths of both. Use the SNT for asset protection and long-term security, and the ABLE account for the day-to-day. Coordinate Contributions: Family members and friends can contribute directly to an ABLE account, with all contributions counting toward the annual gift exclusion limit. It is important to ensure the contribution limit is not exceeded and that the balance of the account does not exceed $100,000 to avoid suspension of SSI benefits. Review your Documents: Ensure your current will and trust documents are up to date and take advantage of the new, higher estate tax exemptions. The OBBB presents a significant opportunity to enhance the financial security and quality of life for individuals with special needs. We are here to help you navigate these changes and build a comprehensive plan that meets the unique needs of your family. | 
