Friday, December 16, 2011

PREPAID FUNERAL ARRANGEMENTS FOR A SPECIAL NEEDS TRUST PERSON

The Social Security and Medicaid rules prohibit payment of funeral expenses (after the death of the beneficiary) from a first party trust by the trustee (i.e. one that contains the assets of, or originally belonging to, the disabled person) prior to repayment to the state Medicaid agency. This is a dangerous trap for unwary trustees. There may be no other funds with which to pay for post death burial expenses outside of the assets in the trust. Thus, it is critical that the trustee arrange for payment of a burial plan PRIOR TO the death of the disabled individual. This requires that the burial arrangements be established with a reputable funeral service provider using fully prepaid contracts that are irrevocable. The funds held by or paid to the provider will not be treated as an available resource to the disabled person as long as the amount expended does not exceed $10,000.


See: OKDHS - OAC 317:35-5-41.2(f)