A prepaid funeral contract is used in Medicaid planning

Attorney Robert Hidock: Tom, as you know, but as part of a spend down for Medicaid, you can do a prepaid funeral. All you have to do is make the contract irrevocable, and that can be up to $11,000 you can prepay your funeral for, and you can do that even right before you apply for Medicaid and it's a proper spend down. If anyone out there is listening and they want information and they go into that conference next year to sell prepaid, it would really be very, very beneficial. Then, Tom, you're allowed that prepaid burial contract, but people with a low amount of assets, they can also have a burial account, account that's designated for burial. We know a regular person is allowed $2,000 in countable assets, they can have a burial account for $2,500, and then they can spend up to $11,000 on an irrevocable burial contract. Those are easy ways of protecting assets.

Attorney Tom Olsen: I think a lot of funeral homes sell a prepaid burial contract, but if you went and talked to the typical funeral home, is it going to be irrevocable? Is a layman out there going to know where, hey, this is irrevocable or qualifies for Medicaid? Do they know what to look for?

Robert: All of them are revocable, because if you want your money back, you're allowed to get it back. The funeral homes don't get that money. When you pay it, it goes into a trust and once somebody dies, once that death certificate comes in, that's when they actually get paid on it. Every contract is revocable, but when you're applying for Medicaid and all of the funeral homes know it was just a little check on the application where they make it from revocable to irrevocable, the contract isn't any different, it's just that one spot that they have to check.

Tom: Irrevocable means it's locked in, no change in your mind now.

Robert: They can't get their money back, so then it makes the asset unavailable.

[00:02:09] [END OF AUDIO]