The Listen to Lawrence Letter: Funeral Trusts

CLIENT QUESTION:

We have an irrevocable trust, which you prepared, so our Medicaid planning is mostly in place.   As you suggested, we just prepaid our funeral expenses in full. Is the funeral trust amount of $13,000 each included as an asset when it comes to the total amount allowable by Medicaid? ($33,038)

MY RESPONSE:

I am glad that you prepaid your funeral expenses. Actually, I do not care if you prepaid it or not. I am really just glad you pre-planned it. I think pre-planning your funeral is a beautiful gift to give your family. At the time of grief, one phone call and all is handled. However, from a Medicaid point of view, prepaying for the funeral is a legitimate spend down of your money (which can be done at the last minute). It will not be counted as an asset that Medicaid can go after. It is exempt. The funeral home will set it up as a “funeral trust” so just tell them that you want the prepayment to be safe from Medicaid (not counted as an asset), and they will designate it as a funeral trust. Nothing fancy. After your death, the money in the funeral trust must be used for your funeral, and if not, Medicaid can then go after it. This stops people from over-funding these funeral trusts.

And, if anyone you know would like to

receive this Listen to Lawrence Letter just

tell them to send their email address to info@davidowlaw.com and I’ll add them to the list!

As always, please send your questions in! If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.

Let’s stay connected. Stay safe!