Burial Arrangements

Irrevocable burial contract, burial trust, or any other separately identifiable fund which is clearly designated for burial expenses. Burial Arrangements include:

  • Burial Contract - A legally binding contract with a funeral home to provide burial arrangements for the applicant/client and/or his/her spouse.
  • Burial Fund (Separately Identifiable) - Separate and identifiable funds (maximum of $1500) designated as being retained solely to meet burial expenses of the applicant/client and/or his/her spouse.
  • Burial Trust - A trust account held for the applicant/client by a third party with use subject to the conditions of the trustor.

Irrevocable Burial Funds

All of the following irrevocable burial funds, trusts or contracts for an individual are exempt, regardless of value:

  • Money or securities placed in an irrevocable trust for funeral, cremation, or interment expenses with the following trustees:
    • Any banking institution or trust company empowered by the State of California to act as trustee in the handling of trust funds.
    • A cemetery authority which has established an endowment care fund.
    • Not less than three individuals, one of whom may be in the employ of a funeral director.
  • Money or securities placed in an irrevocable trust created by the deposit in an insured savings institution made by one person of his or her own money, in his or her own name as trustee, for a funeral director to provide payment for funeral services rendered by the funeral director upon the depositor's death.
  • Life or burial insurance purchased specifically for funeral, cremation, or interment expense, which is placed in an irrevocable trust, or which has no loan or surrender value available to the recipient.
  • Securities issued by a licensed cemetery authority which by their terms are convertible only into payment for funeral, cremation or interment expenses.

Note: The irrevocable burial contract limit for SSI/SSP recipients and Pickle eligibles is $1800.

Interest

Interest earned on or appreciation in value of an irrevocable burial fund is exempt if it is allowed to accumulate and become part of the separately identifiable burial fund.

Changing the Fund

The client may have a burial trust or contract changed from revocable to irrevocable, without penalty. There is no period of ineligibility.

Revocable Burial Funds

The first $1500 paid for a designated burial fund for funeral, cremation or interment expenses is exempt when the fund is revocable.

Exempt

An individual may have both an exempt irrevocable burial fund (any amount) and an additional $1500 in an exempt revocable burial fund.

Designated burial funds include burial trusts, prepaid burial contracts, burial insurance, annuities, or any separately identifiable assets which are clearly designated as set aside for the expenses connected with the individual's burial, cremation or other funeral arrangements.

All applicants/recipients must be advised of this provision.

Designated burial funds must be separately identifiable funds that are clearly designated for burial expenses. This includes:

  • Revocable burial contracts.
  • Revocable burial trusts.
  • Other revocable burial arrangements.
  • Cash-on-hand, provided it is not commingled with other nonburial-related funds.

Savings or checking accounts, stocks, bonds, certificates of deposit and other financial instruments with a definite cash value may be exempted if designated as a burial fund. However, other non-liquid assets, such as a car or real property, cannot be designated for burial expenses.

Interest

Interest earned on or appreciation in value of a revocable burial fund is exempt if it is allowed to accumulate and become part of the separately identifiable burial fund.

Verification

Verification must show proof of the value, the owner, and that the funds have been designated for burial expenses. The “Affidavit for Designated Burial Funds” (SCD 1614) can be used as verification when an asset is not clearly designated for burial expenses (i.e. cash on hand or other liquid assets).

Converting to New Rules

Property that was previously exempt as designated burial funds but does not meet the new criteria must be converted to an allowable form of property in order to continue to be exempted as a designated burial fund.

If an individual has designated burial funds which result in excess property under the new rules, the EW must inform the individual (at application or redetermination) that the property must be converted or separated in order to remain exempt. The client shall be allowed until the end of the month following the month of the notification to complete the conversion or separation of property.

ExampleExampleWhen conducting the annual redetermination in October, the EW finds that an old car valued at $1400 was previously exempted as it would eventually be sold and used for burial expenses. An SCD 1614 is on file, declaring the car as a “designated burial fund”. The EW then contacts the client on 10/15 to explain the available options as the car, when included with other nonexempt assets, now results in excess property. The client is allowed until the end of November to convert the car or other liquid assets into an exempt burial fund, or to otherwise spenddown the excess property. On 12/1 the car becomes nonexempt property.

Commingled Burial Funds

If burial funds are commingled with other assets, the exemption does not apply.

Not Allowed

ExampleExampleA bank account contains $1200, $500 of which is designated for burial and $700 of which is used by the client for living expenses. The $500 cannot be exempted as a burial fund, unless it is moved to a separate account.   

Individuals who were previously approved under the old rules shall be allowed a full calendar month following the month of notification to convert or separate their burial funds.

Note: If eligibility was established prior to August 1, 1990 and the burial funds were exempted prior to August 1, 1990 but they do not meet the new exemption criteria, contact the Medi-Cal Program Coordinator if there are circumstances beyond the client's control that make separation or conversion of funds impossible.

Allowable

The $1500 designated burial fund may be commingled with other burial-related assets.

ExampleExampleAn individual has a single revocable burial contract for $3500, which includes $2000 in burial space items that are listed separately and the value of each item is stated in the contract. Apply the burial space exemption to the itemized burial space items. Apply the $1500 designated burial fund exemption to the remainder of the contract.

Use for Another Purpose

At any time the exempt assets in a designated burial fund, irrevocable burial trust or prepaid burial contract are used for another purpose, these assets will no longer be considered exempt:

  • The amount withdrawn from the account and used toward a purpose other than burial arrangements is considered nonexempt property, unless the funds were used to purchase property which is otherwise exempt.
  • Any amount which is retained for burial expenses shall remain exempt.
  • If the amount withdrawn/converted when added to the existing property reserve makes the individual ineligible, a potential overpayment may result and a period of ineligibility would be calculated if the individual is in LTC.

Designating the CSV of Life Insurance

The cash surrender value (CSV) of a life insurance policy may not be designated as a burial fund since the CSV is only available during the lifetime of the individual, and therefore cannot be specifically for the individual's burial. However, the life insurance policy itself may be designated as a revocable burial fund:

  • The combined face values of the life insurance policies which are being designated as “burial funds” must be equal to or less than $1500.
  • Then, the CSV of each policy must be determined and applied toward the $1500 revocable burial trust limit, as the CSV is the net market value of the policy.

Refer to the chart below to determine when and how to count the value of life insurance when the client chooses to designate the policy as a revocable burial fund:

If...

Then...

The life insurance policy has a face value over $1500,

It cannot be designated as a burial fund, regardless of its cash surrender value (CSV).

The life insurance policy has a face value of $1500 or less,

Determine the CSV. Only the amount of CSV in excess of

$1500 (if any) must be counted as net nonexempt property and included in the property reserve.

The client has two life insurance policies, one with a face value of $1000 and the other with a face value of $500,

Determine the CSV of each. Only the amount of CSV in excess of $1500 must be counted as net nonexempt property and included in the property reserve.

An “Affidavit for Designated Burial Funds” (SCD 1614) is required.

The SCD 1614 is to be used by an applicant who has funds specifically designated for burial use.

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