February 12, 2015

When investing, people often think of putting their money in accounts that will earn large interest rates or dividends. However, when it comes to long term care planning, investing in a pre-paid funeral arrangement can be a terrific choice. Medicaid law treats certain pre-paid funeral arrangements as exempt resources that do not have to be “spent-down” before qualifying for Medicaid. Because of this, having a pre-paid funeral can protect thousands of dollars from the costs of long-term care.

To qualify for Medicaid, a person must generally “spend down” his assets to a certain level before the government will help to pay for his nursing home care. In New York State in 2015, an individual must spend down all non-exempt assets over $14,850. Because qualifying burial items include grave sites, crypts, vaults, mausoleums, caskets, urns, and other like items, correctly owning these exempt assets can help a person protect a significant amount.

To be considered exempt, the pre-paid funeral must be held in an irrevocable burial fund with a funeral home or financial institution in such a way that the funds deposited cannot be withdrawn or used until the beneficiary dies. It is important to not over-fund your irrevocable burial trust, since whatever funds are not used for the funeral will be used to repay the Medicaid agency.

An irrevocable funeral agreement can even include certain burial items purchased for one’s immediate family, including your spouse, children, stepchildren, brothers, sisters, parents, and the spouses of any of those. Burial items purchased for these immediate family members are exempt under Medicaid law.

Although purchasing an irrevocable funeral arrangements or pre-paid burial items may not earn for you large amounts of interest or dividends, it can be a smart investment when you consider the protections it can offer against the costs of long term care.

To learn more, contact us to set up a consultation.