Is it legal to purchase cemetery property for children and their spouses while being a nursing home resident?
Yes, it is “legal” for a nursing home resident to purchase cemetery property (burial spaces) for his / her children and their spouses. For the purposes of answering this question, we are assuming the nursing home resident is not already on Medicaid and may wish to apply for benefits in the future.
In order for an applicant to be eligible for nursing home Medicaid, one of the eligibility requirements is to have limited assets. In most states, as of 2019, this limit is $2,000. However, Medicaid doesn’t count some assets towards this limit. This includes one’s primary home, if the applicant or his / her spouse lives in it or the applicant has “an intent” to return living in it, household items, personal items, and a vehicle. Relevant to the above question, burial spaces are also exempt from the asset limit. (To see asset requirements, as well as assets that are considered exempt by state, click here).
Applicants over Medicaid’s asset limit are required to “spend down” their excess assets in order to meet the asset limit, and hence, qualify for benefits. One way in which applicants do so is by purchasing burial spaces for themselves and their immediate relatives. (Immediate family members may include children, regardless of age, which may be biological, adopted, or step children, siblings, biological or adoptive parents, and the spouses of these persons). To further define burial spaces, this may include burial plots (cemetery plots), mausoleums, crypts, urns, caskets, vaults, grave opening and closing, and headstones. Some states may require that the purchase of burial spaces be irrevocable, meaning the purchaser cannot sell or be reimbursed for these items. Stated differently, if the burial spaces are revocable, they may not be exempt from Medicaid’s asset limit.
Now, getting to the “legal” part of your question. It is our assumption that you are asking if the purchase of cemetery property is a violation of Medicaid’s look-back period, which is a period of time in which Medicaid looks back at all past asset transfers. The look-back period is 60-months in all states, but California, which has a more lenient look-back of 30-months. If it is found that assets have been transferred for less than fair market value, or gifted, a period of Medicaid ineligibility will result. This is because Medicaid assumes this has been done to meet the asset limit. In most cases, the purchase of cemetery property is not a violation of the look-back period. However, as mentioned above, a state may require that the purchase be irrevocable. If this is the case, and the purchase is not irrevocable, it is a violation of the look-back period.
Another option to “spend down” assets and also plan for the future is to purchase irrevocable funeral trusts. This planning technique is complicated, and if not done properly, can violate Medicaid’s look-back rule. In addition, the rules and regulations are state specific. If you are considering this option, it is highly recommended that you seek the counsel of a professional Medicaid planner.