An Irrevocable Funeral Trust is a useful tool for people who are facing the high cost of skilled nursing care.

 The Irrevocable Funeral Trust is an eligible expense during the Medicaid spend-down process. It sets aside sufficient assets so that a surviving family member does not get stuck paying for the cost of burial or funeral expenses after all of the deceased’s assets have been exhausted from the expense of long-term care.

Residents of a Continuing Care Retirement Community, who have been guaranteed that the costs of their care will be paid by the Continuing Care Retirement Community even after their assets have been exhausted, should consider an Irrevocable Funeral Trust if their assets are nearing the point of depletion.

The entire cost of the Irrevocable Funeral Trustis paid in advance. The Department of Public Welfare will allow an Irrevocable Funeral Trust to be created for an amount not to exceed 125 percent of the average cost of a funeral, as determined on a county-by-county basis. As a practical matter, cremation expenses could be half of the cost of an embalming and burial.

There is no medical underwriting. The legal expense to create the Irrevocable Funeral Trust is paid by the insurance company, who acts as the Trustee of the Irrevocable Funeral Trust. There is no expense to the insured party to create the Irrevocable Funeral Trust other than the one-time cost of the insurance, which is the face value of policy, which usually grows at the annual rate of approximately 1 percent.

Upon the insured’s passing and the trustee’s receipt of legal proof of the death, as well as an invoice for the expenses associated with the proper disposition of the deceased by a funeral home or other authorized agency, the trustee will issue a check in a timely fashion. If there are any remaining funds in the Irrevocable Funeral Trust after all the final expenses have been paid, those funds will be paid to the estate of the deceased.

The Irrevocable Funeral Trust cannot be accessed by anyone until the death of the insured party. The family may not borrow from the cash value. The nursing home may not expect that the value be used for the cost of care. After death, the estate recovery process of the DPW may not make a claim against the Irrevocable Funeral Trust to reimburse Medical Assistance expenses of the deceased, until all funeral related expenses have been paid.

Eligible Irrevocable Funeral Trustexpenses include the following:

• Basic services of a funeral director and staff, including cremation or embalming and other care of the deceased;
• Funeral home facilities and/or staff services, including management of a viewing, visitation and a funeral or memorial service;
• Cemetery expenses, including a grave side service, burial plot, vault or crypt, marker, and grave opening and closing;
• Miscellaneous funeral expenses, including a casket or urn, transportation to transfer the deceased, honorariums for clergy and musicians, stationery, flowers, reception refreshments, obituary, clothing the deceased, death certificates, and related and customary expenses.

For more information regarding Pennsylvania State Law regarding Irrevocable Burial Reserve Trusts, visit § 178.5. Treatment of irrevocable burial reserves for all categories of MA.