Are you looking for a way to ensure that your wishes will be honored with regard to your funeral, making sure your family is not burdened with paying for your funeral, and sheltering money for Medicaid purposes? Consider creating a funeral trust which can accomplish all three goals, if drafted properly.
A funeral trust is a specialized trust that is aimed at paying your final expenses. As with any trust, you must name a beneficiary. In this case, the funeral home that handles your funeral and burial will be the beneficiary. You will sit down with them to create your funeral service and decide what type of burial you want. Everything from start to finish will be decided by you. You will then fund the trust with enough assets to pay for the services provided by the funeral home.
Although any type of assets can be used to fund the trust, a life insurance policy is a popular option. You can purchase a life insurance policy that names the trust as the beneficiary. Income earned by the policy may be tax-free as well. When you die, the policy then pays out into the trust. While you are alive, the assets held by the trust are not counted for purposes of the Medicaid program if you apply for long-term care.
Along with all of these benefits, you will also know that your loved ones will not be in the position of trying to figure out how to pay for your funeral at such an emotional time.
Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.