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posted at May 4, 2012 3:16 PM EDT
First: May 4, 2012
Last: May 4, 2012
|Recently Medicaid informed me that the only forms of Life Insurance that don't count as income are "Burial Accounts" & "Irrevocable Funeral Trusts". I have been reading up on these 2 to find the pros & cons of each but, wow, insurance is a difficult field to try to understand if your not in the biz. Is there anyone out there that could give me some advice on the 2?|
Re: Final Expences
posted at May 4, 2012 5:35 PM EDT
First: November 27, 2011
Last: May 18, 2013
In Response to Final Expences:
Recently Medicaid informed me that the only forms of Life Insurance that don't count as income are "Burial Accounts" & "Irrevocable Funeral Trusts". I have been reading up on these 2 to find the pros & cons of each but, wow, insurance is a difficult field to try to understand if your not in the biz. Is there anyone out there that could give me some advice on the 2?
Posted by MIKEnJOY
What you are calling Burial Accounts are prepaid funeral expenses with a specific mortuary, group or membership. You give them money to prepay what you want - they lock you in a price and and the money is invested to hopefully to grow and meet your needs.
Here is the link to the Social Security Admininstration websit discussing them in reference to SSI (Supplemental Security Income) - these rules might be the same as Medicaid, I don't know for sure because your state also plays a part in Medicaid since it is a joint financial effort between the Feds and the states.
SSA: Spotlight on Burial Funds2012 Edition
The "Irrevocable Funeral Trusts" is money that has been set aside by you for a specific purpose and is managed by an entity outside of yourself or family - with the term IRREVOCABLE, it means it cannot be undone and is out of your control to manage. Again sometimes this is done by mortuaries or groups for the purpose of having the funds availavle for burial. Sometimes they are set up by one person for another . Sometimes these are set up as single premium insurance products -
Here is a 2007 article about them from the Seattle times:
Seattle Times November 25, 2007: Irrevocable funeral trusts - Stupid Investment of the Week
"An irrevocable funeral trust . . . . is a single-premium life-insurance policy, typically with a death benefit in the range of $10,000 to $15,000 that is designated for covering funeral costs OR
A funeral trust is a simple legal document, similar, in fact, to what many funeral homes use when having an individual prepay for services.
"It's different from pre-planning a burial, however, because that is done in conjunction with a funeral home. A key selling point behind the trusts is headline-grabbing cases where funeral homes have gone out of business; another is that the trust provides flexibility in picking a service provider, so that the family is not locked into using a certain funeral home."
I DON"T KNOW IF THE IS STILL THE CASE (see below) since this article was written in 2007 - check with an eldercare attorney:
"A key issue behind funeral planning is the need for long-term medical care and the desire to shield some assets from nursing homes or Medicaid. Not only is there a carve-out that allows an individual to set aside money for a funeral, but money used for that purpose "beats the clock;" where most assets must be moved out of an individual's name and/or accounts well in advance of needing long-term care, funeral monies can come out on the eve of moving into the nursing home and just before needing Medicaid."
I suggest you speak to an eldercare attorney on the Irrevocable Funeral Trust. but on the other hand you can take consumer guru, Clark Howard's advice:
Re: Final Expences
posted at November 27, 2012 10:51 AM EST
First: November 27, 2012
Last: March 11, 2013
It is reccomended that you do your own research on Burial Accounts and Irrevocable Funeral Trusts, but also to seek counsel of a trusted advisor such as an estate planning atttorney or funeral professional. Ask for reccomendations from senior groups or from others that have gone through a similar situation.
Evan Guthrie Law Firm 164 Market Street Suite 362 Charleston SC 29401 843-926-3813