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Pre-Need Funeral Arrangements in New York State

Pre-Need Funeral Arrangements in New York

This article is not intended to provide you with legal advice. Should you seek legal advice, please consult an attorney. KTS would gladly recommend an attorney should you need one. It’s important to have an attorney take appropriate actions on your behalf and to avoid issues that may be discussed in this article.

What Are The Advantages of a Pre-Need Funeral Arrangement for New York Medicaid Recipients?

Being prepared for life’s latter years can be very challenging, especially if you are a Medicaid recipient and are juggling finances. One of the biggest future expenditures that cannot be avoided is funeral costs. Fortunately, New Yorkers receiving Medicaid benefits may be surprised to learn that a Pre-Need Funeral Arrangement can be a great financial tool for those receiving Medicaid or are enrolled in a Pooled trust.

It’s a good idea to take advantage of this option prior to applying for Medicaid to help in bringing down assets. Once on Medicaid, you can then pay the pre-need amount out of a Pooled trust to help with excess income limits. Note: This is the only allowable way to pay for funeral arrangements through a Pooled trust and it can only be paid before the individual passes.

The cost of funeral expenses.

If you haven’t noticed lately, funeral costs can be expensive depending on the choices regarding ceremony, casket types, embalming, transportation, burial costs versus cremation, etc. In fact, according to Bankrate, the 2021 funeral costs in New York averaged $8,093 for a burial and $7,463 for cremation. These prices for final expenses are not likely to decline anytime soon. 

Leaving a financial burden on loved ones.

No one wants to leave funeral and burial expenses, or cremation costs to their family members or other loved ones, which can cause a financial burden. This is why many people look for ways to cover these costs in the event of their death. First and foremost, funeral costs will be taken from the deceased’s estate including property, money, and other assets.

Typically, the deceased’s family may need to use estate funds or sell off their property to cover the costs of funeral arrangements. If there is no estate or will, the probate court may choose a close relative to manage these expenses. 

You may already know there is a Social Security Death benefit to help a surviving spouse or child but this benefit is currently only $255. This amount may barely cover the flowers, let alone a funeral service.

But if you are a New York Medicaid recipient, with limited resources, looking for a way to prepare for future funeral costs, the Pre-Need Funeral Arrangement can help you set aside funds. Managing funeral expenses in advance will give you and your loved ones a great sense of relief knowing these finances are in place. In addition, there is no limit to the amount you’re able to deposit to pay for your pre-need arrangement. 

What is a Pre-Need Funeral Arrangement?

The pre-need funeral arrangement is a contract between you and the funeral home, cremation service, or cemetery of your choosing. It is a binding financial agreement to pay the costs of your funeral in advance. The funds placed in such a trust can only be used for the purpose outlined in your contract and should not be confused with a Pooled trust. This pre-need arrangement or trust is specific to covering costs for a pre-arranged funeral.

However, if you are currently on Medicaid in New York and have a Pooled trust in place to help manage your excess income, you can include a Pre-Need Funeral Arrangement as an expense. By establishing a Pre-Need Funeral Arrangement you may be able to continue your eligibility for Medicaid by meeting the strict Medicaid asset and income requirements.

The Pre-Need Funeral Arrangement is a type of trust that gives Medicaid recipients an opportunity to have their funds held for them in a trust account in order to pay for their pre-planned funeral costs. Doing so provides peace of mind that funeral expenses will be covered to prevent leaving this financial burden to their survivors. 

How the pre-need funeral contract works.

  • Choose the funeral home, cemetery, or cremation organization of your choice. 
  • Discuss your needs with a service counselor who can help you make your selections based on their available options.
  • You will be provided with a pre-need contract that summarizes your selections and the costs. This contract will determine what amount you will need to place in your trust.
  • Keep your pre-need agreement and statement of what is included and costs in a safe place with your other important documents.

Benefits of a Pre-Need Funeral Arrangement

There are other advantages to adding the Pre-Need Funeral Arrangement to your Medicaid or Pooled trust in addition to providing Medicaid recipients and their loved ones with peace of mind. Here are some noteworthy reasons for serious consideration:

  • Your Pre-Need Funeral Arrangement will take the future financial burden of your burial or cremation away from your loved ones. This is especially comforting for individuals with low incomes and limited resources including those who are disabled and the elderly.
  • Another benefit includes locking in funeral costs at current prices. There’s no doubt that these costs will likely rise in the future due to economic factors including inflation. Setting up this kind of trust can help ensure your funeral costs will be covered.
  • Pre-planning your funeral gives you the opportunity to consider various options and to make the selections you want including the type of ceremony, who will preside over it (rabbi/priest/reverend), your desired pallbearers, hearst, burial, cremation, and other associated preferences.

If you are concerned about your Medicaid eligibility due to your assets, you may want to try and use your assets before applying to Medicaid. Or you can pay for your pre-need funeral from a Pooled income trust while on Medicaid to spend your excess income. Otherwise, if your income exceeds the allowable limits, you would be required to “spend down” your excess income in order to keep your benefits. 

How do I get started with a Pre-Need Funeral Arrangement?

To set up a Pre-Need Funeral Arrangement you will need to contact a reputable funeral home who will provide the necessary details of your selections and what will be covered including fees and costs associated with your pre-planned funeral.

What is a Pooled Trust?

A Pooled Trust provides Medicaid recipients with help in managing income that exceeds the limits allowed in order to receive benefits. The trust is a legal agreement set up to transfer this excess income to a trust account that is designed to use these funds for payment of allowable monthly expenses like housing, medical, living expenses, etc. Doing so helps such individuals maintain their Medicaid eligibility and benefits. 

Such  are legal remedies that are bound by both Federal and State laws and help many Medicaid recipients become eligible to receive at-home or nursing home care and/or other long-term healthcare. In New York, there are very specific rules and regulations regarding the Pre-Need Funeral Arrangement, which are regulated by the state. Such irrevocable trusts must meet the requirements that have been established to set up and manage this financial arrangement. 

About the author, Carlos Nath:

Carlos Nath is the Senior Trust Advisor with KTS Pooled Trust. As a seasoned professional with over four years of experience in the New York pooled trust space, Carlos has helped thousands to enroll and set up their accounts with KTS. He is proficient in understanding the Medicare process and provides assistance in clarifying what clients may need. Previously, Carlos worked with a Medicaid consulting firm as an advisor who helped clients who were seeking Medicaid assistance.

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