Purchase Funeral Policies for the Entire Family

DE PERE, Wis. - Aug. 7, 2013 - PRLog -- In a Wisconsin decision dated January 18, 2013, a married couple purchased prepaid funeral policies for themselves, their children, and their children's spouses.  Policies were purchased for 13 family members, resulting in a total investment of $195,000.

The prepaid funeral policies consisted of single-pay life insurance policies irrevocably assigned to a trust controlled by an insurance company.  Each policy specified that any unused funds were payable to the insured's estate.  The Medicaid applicant and her husband remained the owner of the policies, and the insured was the appropriate family member for whom the policy was purchased on behalf of.  A "Statement of Goods and Services" accompanied each policy, specifying that the trust would pay for a casket and outer burial container for each insured.

An application for Wisconsin Medicaid benefits resulted in a denial based on the determination that the policy purchases on behalf of the family members were divestments.  The Medicaid office determined that the policies were not something that would be used by the Medicaid applicant or her spouse, the purchases on behalf of family members were not exempt, and because the Medicaid applicant was receiving nothing in return the entire purchase was considered a divestment.

The husband and wife appealed, and argued that the purchases were not a divestment in that the married couple retained ownership of the policies, and the policies outlined the funds therein were used to purchase "burial spaces," which are an exempt asset.  Furthermore, Medicaid applicants are allowed to purchase burial spaces on behalf of themselves, their spouses, and members of the individual's immediate family.  Immediate family is considered an individual's minor and adult children, including adopted children and step-children; and individual's brothers, sisters, parents, adoptive parents, and the spouses of those individuals.

It was determined that because the prepaid funeral policies were used to purchase burial spaces, and the Medicaid applicants retained ownership of the policies, that the purchases were not a divestment.  The key factor in this case appears to be the "Statement of Goods and Services."  Krause Financial Services offers such an agreement with the purchase of prepaid funeral policies.