It takes compassion to care for a disabled family member. It also takes time, which can affect the family’s household finances. That’s the conclusion of the 2020 National Disability Institute report “The Extra Costs of Living with a Disability in the U.S.”: A household that contains an adult with a disability that limits the person’s ability to work “requires, on average, 28 percent more income … to obtain the same standard of living as a similar household without a member with a disability” (tinyurl.com/3f8kmy98).

There is a tax-free savings vehicle that can help. Created about 10 years ago through the Achieving a Better Life Experience Act of 2014 (tinyurl.com/5bvsjmah), the “ABLE” can help families save and invest. The ABLE is a sleeper: The Social Security Administration (SSA) blog “ABLE Act -- 10 Years of Progress for People With Disabilities” notes that ABLE accounts are used by an estimated 3% of eligible people, adding that “a lack of knowledge about ABLE’s existence is the biggest barrier to participation” (tinyurl.com/33r9vffa).

ABLE “allows a person whose disability began before age 26 to save money in the ABLE account without affecting most federally funded benefits based on need,” states the ABLE National Resource Center (NRC) website (tinyurl.com/2275jjyu). And, effective Jan. 1, 2026, the disability onset age is expanding from age 26 to 46.

How is the required severity of disability determined? The applicants “(1) … are receiving Supplemental Security Income payments or Social Security Disability Insurance Benefits; OR (2) their licensed physician signs a document including the diagnosis and stating that they have ‘marked and severe’ functional limitations which began before age 26,” quoting the ABLE NRC webpage “About ABLE Accounts.”

An ABLE account may be helpful with exclusion tests, some of which are as low as $2,000. That is, “Many [public] benefits require meeting a means test that excludes the eligibility of individuals with more than $2,000 in liquid assets/resources,” according to the ABLE NRC FAQs webpage (tinyurl.com/kk6cxk9b).

In contrast, ABLE NRC’s webpage “About ABLE Accounts” points out: “Up to $100,000 of ABLE funds is not a countable resource for Supplemental Security Income (SSI).” In addition, any amount of ABLE funds “up to the state plan limit” does not affect eligibility for programs such as Free Application for Federal Student Aid, Housing and Urban Development, Supplemental Nutrition Assistance Program, Medicaid, Medicare, Social Security Disability Insurance or Vocational Rehabilitation Services.

There are annual contribution limits for ABLE accounts -- for 2025, it is $19,000. However, an account owner “who resides in the continental U.S. and who works and does NOT participate in an employer sponsored retirement plan … may contribute up to an additional $15,060,” states the ABLE NRC webpage “ABLE Account Contribution Limits (2025)” (tinyurl.com/yc7nkfhk), making the total amount $34,060. Residents of Alaska and Hawaii have slightly higher additional limits.

What can the money be used for? “Funds … can be used for a broad range of expenses including food, housing, transportation, education, employment, medical expenses and more.”  Details of what is considered a qualified disability expense (QDE) can be found on the FAQs page for ABLE NRC.

What if the funds are used for a non-QDE item? “A portion of the investment earnings included in the distributed funds will be includible in income and subject to a 10% additional tax,” quoting the SSA webpage “Payee and ABLE accounts” (tinyurl.com/2m82x242).

What do you do if you want to open an ABLE? Start with research to decide on which state’s plan is best for you. Use the ABLE NRC’s “Compare State Programs” tool (tinyurl.com/adrcek7p). By law, an ABLE account can be set up only through a state program.

Once you decide, you can click on a state’s “Learn More” option to locate a link for applying. You will need your personal and financial information (bank account and routing number, used to make the initial deposit to open the account).

In Connecticut, the ABLE investment options are managed by BlackRock, Schwab, Vanguard and Capital Group.

Need to know more? Check out a 20-minute video providing an overview of ABLE basics for 2025 available on ABLE NRC’s YouTube channel (tinyurl.com/yzfb3uuk).

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Does how you "view the world" affect the likelihood of becoming a fraud victim?

The FINRA Investor Education Foundation attempted to address that issue in a recently released study, "Exposed to Scams: What Beliefs About the World Are Associated With Fraud Victimization?" (tinyurl.com/55tp8n48). Also involved in the study were researchers from the University of Minnesota, the University of Virginia, the BBB Institute for Marketplace Trust and the Good People Research Company, a research and advisory firm.

While there has been a lot of research aimed at the relationship between scam victimization and variables such as age, race, financial fragility and financial literacy, "little research has explored whether views about certain domains of our life experience ... are tied to victimization rates," according to the study.

Researchers sought to answer the following questions:

Can mental frames -- defined as "the inner narratives that guide how we think about, view and react to money, people, power, authority and aspects of social life" -- predict scam victimization?

If so, do mental frames predict scam victimization above and beyond other characteristics known to be related to scams?

In the study, an online survey in October 2023 generated 3,087 responses to a total of nine questions, with 19% of the respondents self-reporting scam victimization in the previous 12 months. The questions centered on the following fraud types: investment, lottery, phantom debt, employment, romance, advanced fee, government imposter and tech/account.

The researchers made use of four mental frames that "might influence or guide choices during scam encounters":

-- Compliance: The need to comply with requests, commands rules or regulations.

-- Opportunity: Beliefs about the ways people create, acquire and maintain wealth.

-- Intelligence: The ability to make sound decisions and grasp the deeper meaning of events.

-- Order: Do you believe in a "just world" or one in which there is no guarantee of justice or order?

Of the four mental frames, the study found that two -- opportunity and order -- were associated with scam victimization, even after controlling for demographic variables.

For opportunity, those who viewed the world from a zero-sum perspective -- "clear winners and losers" -- had a higher self-reported scam victimization rate than those who did not hold to the zero-sum perspective.

As for order, those who viewed the world as "unfair" had a higher self-reported scam victimization rate than those who believed in a "just" world. Interestingly, those who held a strong view that the world could be both fair and unfair had a lower self-reported scam victimization rate than those who had a weak belief that the world could be both fair and unfair.

The common denominator with opportunity and order? According to the study, the two views "appear to reflect more dichotomous thinking -- that is, all or nothing thinking with an overreliance on certainty":

"If a person ... prefers that the world operate in a more certain and predetermined way, they might be more willing to 'fill in the blanks' during a scam encounter to make something they want to be true, feel true."

"If they encounter a red flag or suspicious information ... they might ignore the red flag or explain it away rather than submit that the situation or decision might require additional analysis."

The study also contrasted dichotomous thinking with dialectical thinking -- described as "a more flexible form of thinking that can consider two opposing 'truths' simultaneously, prioritizes exploration over certainty, and can accept opposing perspectives.

"[B]eing comfortable with uncertainty, which is a hallmark of dialectical thinking, might be protective because it limits reliance on presuppositions and encourages people to fully examine a situation or an offer."

Researchers cautioned that there are important limitations for their findings, including that "to our knowledge, this is the first study to establish an empirical link between the way people view the world and fraud exploitation."

Yet the study offers a key point to contemplate, that "nuanced consideration is beneficial when evaluating persuasive information, and this can be particularly important when encountering a possible scam."

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If you are wondering about the tax implications of money you receive in an inheritance, you may benefit from an IRS tool that can help answer some of your questions. The tool will only go so far -- you will have to go to your attorney or accountant to get answers to specific situations, especially if you inherit a large estate subject to federal or state estate tax. Keep in mind that two types of taxes can come into play: income taxes and estate taxes.

The Interactive Tax Assistant (ITA) tool deals with income taxes. Found on the IRS webpage "Is the inheritance I received taxable?" (tinyurl.com/2m68k6a9), the tool helps a user "determine, for income tax purposes, if the cash, bank account, stock, bond or property you inherited is taxable." (Note that there is no mention of either estate or inheritance taxes.)

To test the tool, I first answered the initial questions: the tax year I was asking about (2024) and whether the inheritance was from foreign sources (no).

The tool then asks you to identify the type of property inherited, choosing from: cash, including bank accounts; stocks or bonds; property (car, home, land, collectibles); income distributed from a trust or estate (Schedule K-1); or annuity or retirement plan (IRA/Employer Plan).

Choosing "cash," "property " or "stocks or bonds" takes one to a similar answer: "The inheritance is not taxable." That is, these items are "not included in your income," but if they later produce income (through interest, dividends, a gain on the sale of stocks or bonds, or the sale or rent of property), "that income is taxable to you."

A selection of "annuity or retirement plan" brings a request to click on the ITA home link (provided at the bottom of the webpage) to choose an applicable topic under the "Retirement: Pensions, IRAs, Social Security" heading. Those topics have their own versions of the ITA tool so you can further explore possible tax issues.

Select "income distributed from a trust or estate (Schedule K-1)" and you won't get a helpful answer: "This tool cannot determine the taxability of the income you received from a trust or an estate for which you received a Schedule K-1 (Form 1041)." ITA users are referred to the instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040 or 1040-SR, which are located on the IRS website (tinyurl.com/2srnk69h).

The tool does include a disclaimer, stating that the results are based on the information provided and the answers "do not constitute written advice in response to a specific written request of the taxpayer within the meaning of section 6404(f) of the Internal Revenue Code."

As to federal estate taxes, the IRS notes on its webpage "Frequently asked questions on estate taxes" that they are due "if the gross estate of the decedent ... is valued at more than the filing threshold for the year of the decedent's death" (tinyurl.com/y4j2kft8). For 2025, the threshold is $13,990,000 ($15 million for 2026).

As for state estate taxes, 12 states and the District of Columbia impose taxes on estates exceeding certain dollar amounts, and five states have inheritance taxes, according to the American College of Trust and Estate Counsel (tinyurl.com/mrjvy84f). Maryland has both.

Using the IRS tool can help, but it won't answer all your questions. The executor of the estate will likely be working with a trusts and estates lawyer to handle the distribution of the estate, the probate process, and estate and income tax issues.

As someone who inherits, you may need a lawyer or accountant to guide you on taxation of the inheritance you receive. In the article "Dos and Don'ts When You Get an Inheritance," Jeannie Bidner, a managing director at Charles Schwab, a multinational financial services company, writes: "Even if you consider yourself financially savvy, it can be useful to have a second set of eyes on your finances." Bidner adds that you should also talk with a tax adviser (tinyurl.com/bdzxfmjw).

On another note, the 2025 national 401(k) Champion Award is open for applications. Find out details at 401kchampion.com.

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