Relating to trusts for persons with disabilities

ABLE savings accounts allow eligible individuals the opportunity to save and fund a variety of qualified disability expenses without endangering eligibility for certain benefits such as Medicaid and supplemental security income. The bill amends Code chapter 12I relating to persons eligible to enter into a participation agreement and have signature authority over an account on behalf of an eligible individual. The bill provides that a person other than the account owner may enter into a participation agreement and have signature authority over the account on behalf of the account owner in accordance with the Internal Revenue Code and regulations promulgated under federal law. These provisions of the bill are in response to Internal Revenue Code final regulations for qualified ABLE programs published November 19, 2020, which in part, broadened the categories of people who may establish an ABLE account for an eligible individual to provide greater flexibility and reduce the burden on the eligible individual. The final regulations permit an ABLE account to be established by the eligible individual, a person selected by the eligible individual, or if the eligible individual is unable to establish the individual’s own account, by the individual’s agent under a power of attorney or, if none, by a conservator or legal guardian, spouse, parent, sibling, grandparent, or a representative payee appointed by the social security administration, in that order. Additionally, the final regulations allow the ABLE program to rely on self-certification of the individual establishing the account for their basis of authority and priority. The final regulations also provide for signatory authority over the ABLE account by the designated beneficiary, an individual other than the designated beneficiary who establishes the account, or a person selected by the beneficiary. The bill also includes provisions relating to transfers between similar types of trusts and allows that any funds retained in a medical assistance special needs trust or in a supplemental needs trust of a beneficiary with a disability who is also a designated beneficiary of an Iowa ABLE savings plan trust account may be transferred to the Iowa ABLE savings plan trust account of the designated beneficiary in accordance with the provisions of the Code chapters applicable to the specific trusts. With regard to the disposition of account balances following the death of a designated beneficiary, the bill provides that following the death of an individual who is a designated beneficiary of an ABLE savings account established under a participation agreement, to the extent permitted pursuant to Code chapter 12I and under federal law including section 529A of the Internal Revenue Code, the department of human services (DHS) shall not seek recovery of any account balance remaining in the designated beneficiary’s account for medical assistance paid to or on behalf of the designated beneficiary on or after the date the participation agreement was entered into and an account established for the designated beneficiary; DHS shall not file a claim for payment under section 529A(f) of the Internal Revenue Code; and any account balance remaining in the designated beneficiary’s account may be transferred to an account for another eligible individual specified by the designated beneficiary, or if another eligible beneficiary is not so designated, then the account balance shall be transferred to the estate of the designated beneficiary or to the successor.