Money in a revocable prepaid burial contract with a funeral home can be withdrawn. Unless the person agrees and states within the contract that it is irrevocable, the contract is revocable. Exempt $1,500 in a revocable prepaid burial contract. In addition to the $1,500, exempt all amounts designated for burial space, regardless of value (as defined in PM 07-02-09). Apply any remaining amount to the person's resource limit.
The $1,500 burial fund limit on a revocable contract is reduced by:
- the amount of funds held in an irrevocable burial fund, or any other irrevocable arrangement which is available for burial expenses,
- the face value of any disregarded non-exempt life insurance (face value $1,500 or less), and
- other burial funds.
When a person owns both a revocable prepaid burial contract and non-exempt life insurance with a face value of $1,500 or less, take the following steps:
- Disregard the life insurance policy (do not apply cash value to the resource limit). Determine the amount of the prepaid burial to apply to the resource limit by reducing the $1,500 burial fund limit by the face value of the life insurance.
- If the amount applied to the resource limit does not result in spenddown, no further action is needed.
- If the amount applied to the resource limit results in spenddown, determine countable resources by applying the cash value of the life insurance to the resource limit. Do not reduce the $1,500 burial funds by the face value of the insurance. Apply the amount in excess of $1,500 to the resource limit.
- Use the calculation that results in the smallest spenddown amount.
When determining the amount in excess of $1,500 in a revocable burial contract, count only the amount prepaid by the customer. The customer may specify in their contract that, upon death, other resources such as Veteran's Benefits, Railroad Retirement Death Benefits, etc., are to pay the remainder.
Example: A person has a $5,000 prepaid burial fund (no other life insurance). The contract shows $2,500 designated for burial space. The contract shows that the person prepaid $4,000 with the remaining balance to be paid at the time of death with death benefits. The total countable resource in the burial fund is $4,000. After deducting the $2,500 for burial space and the $1,500 burial fund limit on a revocable contract, there is nothing to apply to the resource limit.