Certain amounts set aside as a burial fund to cover the funeral and burial expenses of a client and/or their spouse are exempt. In order to be exempt, the money set aside must be separate and identifiable as a fund to cover funeral and burial expenses.
When a client prepays funeral and burial expenses to a funeral home, the funeral home provides the client with a prepaid burial agreement or contract. The money paid by the client to fund the contract can be held by the funeral home in a trust account or can be used to purchase a life insurance policy on the life of the client. The prepaid burial contract is funded by trust or by life insurance.
The amount that is exempt depends on whether the burial fund is:
- money in a bank account set aside for funeral and burial expenses; or
- a revocable prepaid burial contract with a funeral home, funded by a trust account; or
- an irrevocable prepaid burial contract with a funeral home, funded by a trust account; or
- a prepaid burial contract with a funeral home, funded by a life insurance policy.