Medicaid Policy
Medicaid Policy
No Previous Policy
A burial trust is a written trust agreement that the individual establishes, using the individual’s assets, for paying the various expenses of the individual’s funeral and burial at some point in the future. If the trust allows any payments from the trust, either from the corpus (principal) or the earnings, to be used for a purpose other than the expenses of the individual’s funeral and burial, it is not a burial trust.
The individual has established a burial trust if the individual uses his or her assets to form all or part of the burial trust and if any of these individuals established the burial trust other than by will:
The individual,
The individual’s spouse,
A person, including a court or administrative body, with legal authority to act in the place of or on behalf of the individual or the individual’s spouse,
A person, including any court or administrative body, acting at the direction or upon the request of the individual or the individual’s spouse.
If the burial trust includes assets of anyone other than the individual who established the burial trust, apply this definition and the rules in this section only to the individual’s portion of the burial trust.
Use the rules for burial trusts in 596-2 or 596-3 when:
An individual establishes a revocable or irrevocable burial trust with the individual’s assets.
An individual irrevocably contracts with a provider for funeral goods and services, and the individual establishes a revocable trust to fund the contract. NOTE: If the individual pays the funeral provider for the contract, and the funeral provider sets the funds aside in a trust (as required under law), the individual has not created a burial trust. The individual has bought a pre-need funeral contract. See sec. 594 for pre-need funeral contracts.
Burial trusts do not include Pre-need Funeral Contracts
A pre-need funeral contract is not a burial trust. When an individual pays for a pre-need funeral contract, the exchange is a purchase. The individual receives a contract for burial services and items in return for the payment.
Use the rules for pre-need funeral contracts in 594 when:
An individual revocably or irrevocably contracts with a provider for funeral goods and services; and
The individual funds the contract by prepaying for the goods and services or pays in installments; and
The funeral provider subsequently places the funds in a trust; or
Use the rules for life insurance funded pre-need funeral contracts in 594-4 when:
An individual funds a pre-need funeral contract by purchasing a life insurance policy and assigns, revocably or irrevocably, the proceeds or ownership of the policy to the funeral provider.
Use the rules for burial trusts in 596 when:
The individual funds the contract by establishing an irrevocable burial trust, naming the funeral provider as the beneficiary.