| Do You Need to Set Up A Funeral Trust?….read on:
READER QUESTION:
Hello Lawrence,
I wanted to inquire…can you prepay for funeral costs before you become eligible for Medicaid? My parents are eligible for Medicaid, but their IRA RMDs that will be paid out may slightly put them above the resource limit. Therefore, would creating an irrevocable funeral trust help with the spend-down of the excess asset? Do you need to choose a specific funeral home, or do you just create an irrevocable funeral trust? Do we need to go with a law firm to do this? Thanks in advance.
MY RESPONSE:
An irrevocable funeral trust is a legitimate “last-minute” spend-down of money to qualify for Medicaid. You don’t need a lawyer to set this up, and the whole process is very simple. All you need to do is go to the funeral home of your choice and tell them you want to set up a “Medicaid Safe Account.” They will understand what you need, but officially, this account is called an “irrevocable funeral trust.” It is just an account. The bottom line is that the funeral home will hold the money and use it for the funeral, and if you do not spend it all on the funeral, then Medicaid has a right to reimbursement from the account later. It is that simple.
This is just one of many ways to legally spend down excess assets at the last minute and preserve Medicaid eligibility. There are numerous other strategies available depending on your circumstances.
If you or a loved one needs to apply for Medicaid, our office handles the entire application process. More importantly, we help families understand all the available options to protect assets, preserve income, and maximize benefits. |
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