Elder Medicaid Funeral Trusts & Spend-Down Planning
Understanding Medicaid & Funeral Trusts: Why They Matter
What is Medicaid Spend-Down?
For seniors applying for long-term care Medicaid, eligibility often requires “spending down” assets to fall below the state’s financial limits. This process must be done carefully to avoid penalties or ineligibility.
The Role of Funeral Trusts in Medicaid Planning
An irrevocable funeral trust is one of the few legally approved tools that allows individuals to prepay their funeral expenses without affecting Medicaid eligibility. Funds placed in a properly structured trust are not counted as part of the applicant’s assets.
What is a Funeral Trust?
A Financial Tool for End-of-Life Planning
A funeral trust is a legal agreement where an individual sets aside money—usually through a funeral home, bank, or insurance company—to cover their own funeral and burial costs.
Two Types of Funeral Trusts
1. Irrevocable Funeral Trust (IFT)
- Cannot be canceled or changed
- Funds are protected and Medicaid-exempt
- Typically used to spend down assets legally
- Ensures that funeral expenses are prepaid and guaranteed
2. Revocable Funeral Trust
- Can be changed or canceled by the individual
- Funds are counted toward Medicaid asset limits
- Not useful for Medicaid planning
Why Choose Irrevocable?
An IFT offers peace of mind, protects eligibility for Medicaid, and ensures your final expenses don’t become a burden to loved ones.
Medicaid Compliance and Asset Protection
How Medicaid Evaluates Your Assets
Medicaid has strict asset thresholds. In New York (as of 2025), an individual applying for long-term care Medicaid must have no more than $30,182 in countable assets. Assets beyond that must be “spent down” appropriately.
Are Funeral Trusts Counted?
Funds in an irrevocable, Medicaid-compliant funeral trust are not counted as assets, provided:
- The trust is set up solely for the applicant’s funeral
- The funds are not excessive
- The trust is irrevocable
- The trust complies with state-specific rules
Our attorneys at Angiuli & Gentile, LLP ensure all criteria are met to avoid Medicaid penalties or disqualification.
State-Specific Funding Guidelines
How Much Can You Place in a Funeral Trust?
While some states have firm dollar limits, New York does not impose a hard cap, but funds must be considered “reasonable and customary” for a funeral in your region.
What’s Allowed?
- Casket, urn, vault, burial plot
- Funeral home services
- Clergy or celebrant fees
- Headstone, obituary, flowers
- Death certificates and transportation
What’s Not Allowed?
- Travel arrangements for family
- Flowers for anyone but the deceased
- Receptions or catering
- Excessive or luxury items
Our team will work with licensed funeral homes and trust providers to ensure all items are within Medicaid-acceptable limits.
Legal Steps to Establish a Funeral Trust
Step 1: Evaluate Financial Standing
We’ll begin by reviewing your existing assets, income, and Medicaid eligibility status to determine if a funeral trust is appropriate.
Step 2: Drafting the Irrevocable Funeral Trust
Our elder law attorneys will:
- Work with you to select a funeral provider or trust administrator
- Structure the trust to meet Medicaid and legal requirements
- Ensure the trust is irrevocable and properly documented
- Align the trust with your broader estate plan
Step 3: Integrate With Medicaid Application Process
We’ll guide you through coordinating the trust with your Medicaid application timeline to avoid mistakes during the look-back period.
Integration With Broader Estate and Elder Law Planning
A Funeral Trust Is Just One Piece of the Puzzle
At Angiuli & Gentile, LLP, we understand that no single tool covers all elder care needs. We help integrate funeral trusts into a comprehensive legal strategy, which may include:
- Medicaid Asset Protection Trusts (MAPTs)
- Powers of Attorney & Healthcare Proxies
- Wills & Trusts
- Long-Term Care Insurance Review
- Probate Avoidance Strategies
- Spousal Asset Protection
A well-structured plan gives your family confidence and clarity—and protects your eligibility and your legacy.
Common Mistakes to Avoid
The Risks of DIY Medicaid Planning
Mistakes in funeral trust planning can have serious consequences. These are some common errors we help clients avoid:
- Using a revocable trust when irrevocable is required
- Overfunding the trust with unnecessary or excessive items
- Failing to create the trust before the Medicaid look-back period
- Trust documents that are non-compliant with state Medicaid laws
- Working with unlicensed or out-of-state providers
Legal compliance in Medicaid planning is critical. One small mistake can delay benefits or trigger asset recovery by the state.
Frequently Asked Questions
What is a funeral trust, and how does it relate to Medicaid?
A funeral trust is a legal arrangement that allows you to set aside funds for your funeral and burial expenses. When set up as irrevocable and Medicaid-compliant, these funds are not counted as assets when determining Medicaid eligibility. This makes funeral trusts a valuable tool in spending down excess assets legally and strategically.
How much money can I place in a funeral trust for Medicaid planning?
It depends on your state. In New York, there is no specific dollar cap, but the amount must be considered “reasonable and customary” based on average funeral and burial costs in the region. Our firm ensures your trust is properly funded within Medicaid guidelines to avoid penalties.
Will the funds in a funeral trust be subject to Medicaid estate recovery?
No. Funds in a properly structured irrevocable funeral trust are not subject to Medicaid estate recovery, because they are not considered part of your estate at the time of death. This helps protect your beneficiaries and ensure that your funeral costs are fully covered.
Do I need to set up the trust before applying for Medicaid?
Yes, ideally. While irrevocable funeral trusts are generally exempt from the 5-year Medicaid look-back period, setting it up before applying helps avoid administrative issues or delays. We can assist you with timing and documentation to ensure everything aligns with your application.
Can I use any funeral home or provider to set up the trust?
Not all funeral homes or providers offer Medicaid-compliant irrevocable trusts. We work only with licensed, reputable, and state-approved providers to ensure your trust is legally valid and accepted by Medicaid reviewers.
Why Choose Angiuli & Gentile, LLP?
Experienced Elder Law Attorneys in Staten Island
With over 30 years of dedicated legal experience, Angiuli & Gentile, LLP has earned a reputation as a trusted authority in elder law, Medicaid planning, and estate protection throughout Staten Island and the greater New York region. Our team combines legal knowledge with compassionate advocacy to guide families through some of life’s most sensitive transitions.
Personalized Legal Strategies for Every Family
We recognize that no two clients are the same. Whether you’re helping an aging parent qualify for Medicaid or planning your own future care, we take the time to understand your goals and tailor a legal strategy that aligns with your values, your finances, and your family’s needs.
In-Depth Knowledge of Medicaid and Elder Law
Our attorneys stay ahead of evolving New York Medicaid regulations, ensuring that your funeral trust, asset protection strategy, and Medicaid application are fully compliant with the latest legal requirements. We help you avoid costly missteps that can jeopardize eligibility or delay benefits.
Compassionate Counsel with Legal Precision
Long-term care planning involves emotional, financial, and medical considerations. We understand the complexity—and the sensitivity—of these decisions. Our elder law attorneys deliver clear, compassionate guidance at every step, helping you move forward with clarity and confidence.
Deadline-Driven and Results-Focused
Medicaid applications are time-sensitive. Trusts must be created correctly and at the right time. We are meticulous about timing, documentation, and legal precision to ensure your application is submitted on schedule and without errors.
A Proven Partner in Your Peace of Mind
At Angiuli & Gentile, LLP, our mission is simple: to protect your rights, preserve your benefits, and help you plan with peace of mind.
From initial consultation through final approval, our team is here to support you—and your loved ones—every step of the way.
Contact Angiuli & Gentile, LLP Today
Let’s protect your assets while ensuring your final wishes are respected. Whether you’re planning ahead or facing an urgent Medicaid application, we’re here to help.
Contact us today to schedule a confidential consultation with one of our elder law attorneys.
