An irrevocable funeral trust account (IFT) is a financial arrangement designed to help individuals pre-plan and fund their funeral expenses. It is a type of trust account specifically created for the purpose of setting aside funds to cover funeral and burial costs.
Here’s how it generally works:
Establishment: The individual (the “grantor”) establishes an irrevocable trust account with a funeral home or a designated trustee. The trust is considered “irrevocable” because, once established, the grantor typically cannot modify or revoke it without the consent of the trustee or funeral home.
Funding: The grantor deposits funds into the trust account. The amount can vary based on the estimated cost of the funeral and burial services, as well as any additional expenses the grantor wishes to cover, such as a memorial service or a cemetery plot.
Management: The trustee or funeral home manages the funds within the trust account. They are responsible for investing and safeguarding the money until it is needed to cover the funeral expenses.
Medicaid Exemption: One of the key reasons individuals choose an irrevocable funeral trust account is to potentially qualify for Medicaid benefits. In many jurisdictions, funds held within an irrevocable trust for funeral expenses are typically excluded from an individual’s countable assets when determining Medicaid eligibility. This allows individuals to set aside funds for their funeral without affecting their eligibility for government assistance.
Distribution: When the grantor passes away, the funds from the irrevocable funeral trust account are used to pay for the funeral and burial expenses as outlined in the trust agreement. Any remaining funds may be distributed to the grantor’s beneficiaries according to the terms specified in the trust.
MMCCU can assist with these. A member would go to the funeral home first and then bring the paperwork to MMCCU.
“We keep the deposit on hand and fill out our portion of the paperwork that ultimately goes back to the funeral home to keep on file. Upon the member’s death, an individual identified in the paperwork follows up with us to close the certificate and issue the proceeds to the funeral home to cover those costs,” explained David Murphy, MMCCU President.
It’s important to note that the specific rules and regulations surrounding irrevocable funeral trust accounts can vary by jurisdiction. Therefore, it’s advisable to consult with a qualified attorney or financial advisor familiar with the laws in your area to ensure compliance and make informed decisions regarding your funeral planning.
MMCCU can help with this process! Give our friendly team a call today!
