Irrevocable Funeral Trusts

For your convenience, here is a quick overview of the benefits

of Funeral Trusts. (power point)

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Printable overview (2) pages: 

Trust Benefits

Establishing an Irrevocable Funeral Trust for

your final expense plan, is one more step in protecting your assets.

The trust ensures that your funeral expenses are paid first and are protected

from any creditors, or being counted as an asset for Medicaid spend down.

If you need to qualify for Medicaid, the trust can ensure that your final

expense trust is left intact and is available to pay for funeral expenses.

You may already have a family member in a nursing home, it doesn't matter.

The moment you establish an Irrevocable Funeral Trust, the funds are

removed from that persons estate without penalty, and no longer is a

countable asset towards Medicaid spend down, and is protected

from creditors.

Families holding the Debt

Without a Funeral Trust for Final Expense being protected, families are having

to pay for their parents funerals, averaging $8,000 to $12,000 out of their

own pockets.  Nobody wants to pass this "bill" on to their kids or spouse.

Without the asset protection of a funeral trust (state limits below)

to protect and preserve these funds, families are left taking loans or

going into debt.

Here for example "only" is the Wisconsin Medicaid Handbook page, how

it describes how Irrevocable trusts are treated as a non-asset.

http://www.emhandbooks.wi.gov/meh-ebd/

a perfect solution
There are a number of choices to resolve your concerns about

pre-paying for your final expenses.

The following are ideas on how to fund a 'Funeral Trust' and why

it is a better choice for investing the money that you will set aside

for your final expenses than other investments.

Not everyone wants to use cash to fund their funeral trust, consider

these alternatives:

Redeem your US Savings Bonds:
Most people forget about their savings bonds and don't have an

exit strategy once their savings bonds reach final maturity

(when they stop earning interest).

Others believe that their Savings Bonds can be used for their

final expenses. However, before you can be admitted into an assisted

living facility or Nursing home – expecting the state to pick up the costs

you will be asked if you own any US Savings Bonds - since they are

considered by Medicaid to be a 'countable asset'.

You will have to cash-in your savings bonds and 'spend down' the

proceeds BEFORE expenses for your care will paid for by the state.

This could also involve unnecessary tax implications at a time when

you least need more complications.

So, while you are still in full control of your faculties, and before you

become ill or incapacitated, why not convert some (or all) of your

savings bonds into an 'Irrevocable Funeral Trust'. If you would like to

learn the exact value of your US Savings Bonds, right now,

visit www.savingsbonds.com/guru and obtain a complimentary

Savings Bond Performance Report© that will show you the value

of all the bonds you choose to enter into the service ...and a whole

lot more.



Committing your final expense funds to a specific

funeral home is not a wise decision:
The Funeral Home where you pre-paid for your final expenses might

not still be in business - or if it is, the person(s) that you placed your

trust and confidence in when you created your final arrangements

plan might not be available to carry out your instructions - when you

need their services.  Read the AARP article exposing the

scandal and risks:

R.I.P. OFF

by Barry Yeoman, Jan & Feb 2008

 "A Funeral-Industry Scandal that's FLEECING Thousands of

Americans." 

http://www.aarpmagazine.org/money/funeral_rip_off.html

The Funeral Home where you pre-paid for your final expenses might

be sold or merged into a larger, less personal organization which you

might not want handling your final arrangements - and they MIGHT NOT

honor your request for a refund

Your future plans might have you moving to a different city and/or

state to retire - or to be near loved ones - thereby making your

earlier arrangements obsolete With a 'Funeral Trust' you are not

obligated to have your final arrangements handled by any one specific

person or entity - your arrangements can be handled by any relative,

other person, entity or funeral home at the time of your passing


Continuing to hold onto a fully paid-up life insurance

policy is not a wise decision:
A fully paid-up policy, with a cash value of more than $1,500.00 is a

countable asset and the total amount can be confiscated by Medicaid

or a nursing home.

Your existing insurance policy can be EXCHANGED - via a process

know as a '1035 Exchange' – with no reduction or loss of any benefits

or value already earned - into a new policy that will be placed into,

and owned by, your 'Irrevocable Funeral Trust'. This will prevent

your funds safe from confiscation by any entity (Nursing home,

Doctors, Hospitals, etc). Your final expense monies are guaranteed

to be there when you need them.

Annuity - you can do a "partial withdrawal" and transfer funds i

nto a Funeral Trust.
 

 Most Asked Questions:

THE #1 QUESTION THAT EVERYONE ASKS:
Why should anyone obtain an Irrevocable Funeral Trust? To protect and secure a

portion of their assets BEFORE the ravages of astronomical medical expenses

consumes their lifetime savings, leaving them with insufficient funds to pay for

their passing from this earth in a proper, dignified manner.
 

What expenses are paid for by an Irrevocable Funeral Trust?
Basic Services of Funeral Director & Staff
Professional Services Embalming
Other Care of Deceased
Dressing / Cosmetology Casketing
Funeral Home Facilities and/or Staff Services
Viewing/Visitation
Funeral Service
Memorial Service
Graveside Service
Clergy Honorarium
Death Certificates
Musicians
Temporary Marker
Stationery Package
Obituary Notices
Flowers
Clothing
Open/Close Casket
Alternative Container
Outer Burial Container
Transportation Equipment & Driver
Transfer of Deceased
Funeral Vehicle/Hearse
Car/Limousine
Utility/Service Vehicle
Cemetery Charges

What is the maximum amount a Funeral Trust can be written for?
The maximum policy amount is $15,000. However, most states restrict the

amount to a maximum of $12,500. This amount may be more or less in

your state since each state interprets the Medicaid laws differently.

STATE LIMIT ($)
Alabama (AL) $12,500.00
Alaska (AK) $12,500.00
Arizona (AZ) $12,500.00
Arkansas (AR) $12,500.00
California (CA) $12,500.00
Colorado (CO) $12,500.00
Connecticut (CT) $5,400.00
Delaware (DE) $10,000.00
District of Columbia (DC) $12,500.00
Florida (FL) $10,000.00
Georgia (GA) $10,000.00
Hawaii (HI) $12,500.00
Idaho (ID) $12,500.00
Illinois (IL) $4,000.00
Indiana (IN) $10,000.00
Iowa (IA) $12,500.00
Kansas (KS) $5,000.00
Kentucky (KY) $12,500.00
Louisiana (LA) $12,500.00
Maine (ME) $12,500.00
Maryland (MD) $12,500.00
Massachusetts (MA) $12,500.00
Michigan (MI) $9,238.00
Minnesota (MN) $12,500.00
Mississippi (MS) $12,500.00
Missouri (MO) $12,500.00
Montana (MT) $12,500.00
Nebraska (NE) $3,000.00
Nevada (NV) $12,500.00
New Hampshire (NH) $12,500.00
New Jersey (NJ) $12,500.00
New Mexico (NM) $12,500.00
New York (NY) Not sold in NY
North Carolina (NC) $10,000.00
North Dakota (ND) $5,000.00
Ohio (OH) $12,500.00
Oklahoma (OK) $7,500.00
Oregon (OR) $12,500.00
Pennsylvania (PA) $12,500.00
Rhode Island (RI) $12,500.00
South Carolina (SC) $12,500.00
South Dakota (SD) $12,500.00
Tennessee (TN) $6,000.00
Texas (TX) $12,500.00
Utah (UT) $7,000.00
Vermont (VT) $10,000.00
Virginia (VA) $12,500.00
Washington (WA) $12,500.00
West Virginia (WV) $4,000.00
Wisconsin (WI) $12,500.00
Wyoming (WY) $12,500.00


What is the lowest amount a policy can be written for?
The minimum policy amount accepted is $1,000 for most states. In some

states the minimum amount is $500.

 

What is an Irrevocable Funeral Trust (IFT) ?
The IFT is an agreement between the grantor/insured and one or more

Trustees named by the Company, which is established to make funds

available upon the death of the grantor/insured, for the purpose of paying

the final expenses, up to the limits of the amount placed into the IFT, as

defined in the IFT Agreement.


What is the definition of an Irrevocable Funeral Trust?
IRREVOCABLE means it is impossible to change or distribute the funds

delivered into the IFT by the grantor/insured until the terms stated in the

IFT are met. Thus, none of the terms of the agreement can be changed,

amended or canceled by any person or entity. The trust may not be

terminated or liquidated except through the distributions permitted by

the terms stated in the IFT. i. e. the death of the grantor/insured.


What is a Trustee?
The Company will designate one or more Trustees to carry out the

terms as specified in the IFT. Upon proper notification that the insured

has passed away, the Trustee, appointed by the Company, will carry

out the terms contained in the IFT.


What will the Trustee do with the property [funds] that

the grantor/insured has transferred into the IFT?
Under the terms of the IFT, the Trustee shall have no duty to, and is

expressly prohibited from, changing, liquidating, or diversifying any trust

assets contributed by grantor/insured. Thus, the Trustee cannot surrender

a policy to any person or entity for its cash value. The Trustee can only

make distributions according to the trust indenture that states that distributions

shall be made FIRST to a service/product provider(s) in payment for the

grantor/insured person' s final expenses. In the event that there are any

remaining [excess] funds, the Trustee is obligated to distribute them to

any residual beneficiary so named, or to the estate of the deceased.


Can the Trustee change the beneficiary of the IFT?
No.


Can the Trustee change the owner or beneficiary of the

life insurance policy?
No.

 

Do these transfers qualify for exclusion, without

penalty, regardless of any look-back period or

spend down provisions of Medicaid?
The IRREVOCABLE assignment of assets to an IFT is designed

to qualify those assets for exclusion, without penalty, regardless

of any look-back period or spend down provisions of Medicaid.

However, since the rules are somewhat different in each state,

check the state of legal residence of the proposed grantor/insured

for the specific rules and regulations currently in effect.


Who can be named as a residual beneficiary?
The servicing funeral home will automatically be paid FIRST

according to the terms of the IFT. If there are any funds remaining

[residual funds], the Company recommends that the residual

beneficiary be a family member of the grantor/insured.


Why shouldn't a spouse be named as a residual beneficiary?
The client can name anyone they choose as a residual beneficiary.

However, the Company recommends that the grantor/insured name

someone other than their spouse in order to avoid the funds coming

back into the estate and creating problems with potential creditors,

and estate taxes.


Can the residual beneficiary be changed at a later date?
No. This is why it would be best to name a much younger family

member as the residual beneficiary.


If the residual beneficiary is a family member, is the

amount paid to the residual beneficiary subject to

the look-back period or spend down provisions of

Medicaid?
The IRREVOCABLE assignment of assets to the

IFT has been designed to qualify those assets for exemption,

without penalty, regardless of any look-back period or spend

down provisions of Medicaid, and regardless of whether the residual

beneficiary is a family member.


Are you allowed to have more than one policy in the trust?
No. Each policy must have its own IFT.


Can any individual have more than one IFT?
Yes. However, the aggregate amount of all IFTs cannot exceed

the total exempted amount based on Medicaid laws in any given state.


Can the money be taken back once the assignment

into the IFT made?
Yes. But ONLY during the 30 day 'free-look' period. Should the grantor/insured

decide not to continue with the IFT, all assets will be returned to the

grantor/insured and the IFT is effectively cancelled. The 30 day 'free-look'

period begins the day after the grantor/insured receives the acceptance

letter and Certificate of Coverage from the Company. Once the 30 day

'look-back' period expires, the funds will not be returned for any

reason whatsoever.


Explain the Part A and Part B in the trust agreement.
The Trustee shall divide the Trust Estate into two separate shares,

trusts A and B. Trust A shall be composed of cash in an amount

equal to the lesser of (1) the maximum amount that may be set

aside in the state of the grantor/insured's residence for funeral

expenses and qualify as Exempt Assets for purposes of Medicaid

qualification, less the aggregate amount of assets designated for

such purposes not owned by this Trust or (2) the grantor/insured's

funeral expenses paid or payable by the Trustee in accordance

with and as specifically authorized by grantor/insured's expense

directive attached to the Trust as Exhibit "A". Trust "B" shall be

the balance of the Trust Estate after the assets have been allocated

to Trust "A". This provision in the trust allows the grantor/insured to

take the maximum amount for funeral expenses and qualify as

Exempt assets for purposes of Medicaid qualification as

determined in the grantor/insured's state of residence.


Is a specific funeral home named anywhere in the

application documents?
No. This is one of the main attractions of an IFT. A person may pass

away and have a funeral and subsequent burial in any state. Those

persons responsible to handle a deceased grantor/insured burial

arrangements will carry them out. The Trustee of the IFT will distribute

the funds in accordance with paying the servicing funeral home that

provides the products and services FIRST.


Can these funds be attached by Medicaid, nursing

homes, doctors, hospitals or other creditors?
No. The IFT is designed to qualify these assets for exemption, without

penalty, regardless of any look-back period or spend down provisions

of Medicaid. As such, assets exempt from Medicaid would not be

attachable by any other person or entity.


Can the client cash in the policy/trust at a later date?
No. The grantor/insured can only cancel this policy during the 30 day

'free look' period and have their fund returned. Once the client has

assigned all rights of the policy to the IFT, these assets are no longer

under their control. They cannot cash it in, borrow against the cash

value, or implement any other similar type of options that might be

considered as an attachment or an attempt at 'breaking the trust'.

This is the IRREVOCABLE portion of the title an Irrevocable Funeral

Trust. If the trust is not IRREVOCABLE, it would be subject to

attachment by any and all types of 'creditors', including nursing

homes and other entities. The grantor/insured's signature on the

IFT document is an assignment and a complete severance of their

control, or any other person or entity's ability to get access to these

funds.


How long does it take to get the funds distributed at

the time of death?
The funeral home providing the services will fax or mail a copy of the

itemized bill, signed by a family member, or an authorized representative

of the family, along with a copy of a certified death certificate to the

Company. Within 1-2 day(s), the funds of the IFT are distributed

[paid out] to the servicing funeral home FIRST. Any residual funds

will be distributed to the Residual Beneficiary [Beneficiaries] the

following business day.


Who is officially named as the owner and primary beneficiary

of the policy?
The owner and primary beneficiary will be the Trustee designated

by the Company. The purpose of this is to keep the funds in the IFT

apart from the estate or spouse of the deceased.


Why does the grantor/insured assign their policy

]ownership rights to the IFT?
The grantor/insured's assigns their rights to ownership of the policy

to the IFT to remove the funds from their control and permanently

remove them from their estate. This further prevents these funds from

being pursued by any and all creditors.


If you have a question feel free to contact me.

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