Revocable and Irrevocable Funeral Trusts

Last updated: September 09, 2019
Medicaid Long Term Care | Questions and AnswersCategory: EligibilityRevocable and Irrevocable Funeral Trusts
Anonymous asked 5 years ago

We were denied Medicaid because of a revocable funeral trust. Can an existing trust be made irrevocable?

1 Answers
medicaidplanner Staff answered 5 years ago

Yes, a revocable funeral trust can be converted into an irrevocable funeral trust.

Let’s quickly discuss the difference between revocable and irrevocable funeral trusts. While both types of trusts provide a means to pay for burial and funeral expenses in advance, only irrevocable funeral trusts are exempt from Medicaid’s asset limit. This is because revocable funeral trusts can be changed and cancelled, while irrevocable trusts cannot be changed nor cancelled. Essentially, the assets in a revocable funeral trust are still available to the Medicaid applicant, which is why this type of trust is counted towards the asset limit. (In most cases, the asset limit is $2,000 for an individual. Therefore, a revocable funeral trust will often push an applicant over the asset limit, disqualifying him / her from Medicaid eligibility.) On the other hand, since a Medicaid applicant cannot cancel an irrevocable funeral trust and access the funds, this type of trust is exempt from Medicaid’s asset limit.

So, going back to converting an existing revocable funeral trust to an irrevocable trust; Likely the best way to do this is to cancel the revocable funeral trust and then purchase an irrevocable funeral trust. For persons who wish to convert a revocable funeral trust into an irrevocable funeral trust, it is best to contact a professional Medicaid planner for assistance.

To learn more about irrevocable funeral trusts, click here.

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