NEW YORK PROTECTIONS
Many people are leary about purchasing a pre-paid funeral. This blog discussed some of the issues common to prepaid funerals. In 2002, the American Association of Retired People (AARP) issued a consumer “scam alert” warning people to preplan but not prepay for their funerals. Indeed, often this is good advice. What really should be discussed and should be planned for and paid for is an irrevocable prepaid funeral fund.
It will not render a person ineligible for Medicaid, as Medicaid treats irrevocable trusts as an exempt asset. Some prepaid funeral plans incur account maintenance fees or various other unforeseen problems could result from prepaying for a funeral. It is important to note, however, that New York has some of the strongest consumer protection laws in place for prepaid funerals. Most specifically, the law requires that the money be put into an individual account – as opposed to an account for all of the individuals who prepay for their funeral through a particular funeral director or funeral home – that is both interest bearing and insured, which remains the property of the consumer. If the funds are in a revocable account, the consumer may request a full refund at any time. The funeral home or funeral director also ensures that the consumer receives a notice of what bank the funds are held in and as well as a statement of any interested earned.
REVOCABLE VERSUS IRREVOCABLE
As noted setting up an irrevocable funeral trust does not render a person ineligible for Medicaid, as the funds as excludable for Medicaid determination purposes. If the funeral funds are paid for via an irrevocable trust, any money left over after the funeral are to be forwarded to “the appropriate agency of the county” where the beneficiary was residing at the time he/she passed away. Revocable trusts are considered assets of the individual for purposes of Medicaid eligibility. Revocable trusts also allow for the funeral home or funeral director to pay any money left over to the estate. Both types of trusts or accounts are “portable”, meaning that the individual may choose a different funeral home, even in another state, without penalty.
There are many considerations that go into deciding where you want your funeral to be held, including location, religious affiliation, community contacts, family history, et cetera. There is nothing, however, barring you from shopping around, seeking prices for various different services or accommodations. There may be a wide array of prices for essentially the same thing in small geographic area. Furthermore, there is even a market for purchasing your own casket online. While it may sound bizarre to some, it is not as uncommon as some may think. Moreover, there can be substantial savings. It is important that you discuss your decisions with your family. It is not a good idea to simply write up your plans and store them in safety deposit box.
As with any decision regarding end of life matters and/or decisions that may affect your ability to obtain Medicaid, it is best to speak with an experienced elder law attorney.