Planning in advance of need for funeral service has been steadily growing in popularity over the past 10 years. Since many parents live long distances away from their children, the popular belief is that it will relieve family members of the difficult decisions to be made. Additionally, the rise in nursing home entrance among older adults and the "spending down" requirements for Medicaid eligibility has resulted in the need to pre-fund funeral arrangements.

Advanced planning arrangements may be made in several different ways depending on the need and comfort level of individuals. The first may include providing all family and vital statistical information for the funeral home file, as well as selecting merchandise and establishing a fully prepaid funeral trust account. A second option may only include the recording of family, vital statistical information and choices for casket, vault and sundry items; and a third may only include family and vital statistical information.

The laws in New York State require that funds paid in advance of need for funerals be placed in a individual trust account naming the individual as the purchaser and beneficiary and the funeral home as the trustee. This method of preplanning protects the funds should there be change in ownership or status of a funeral home. The interest earned on trusted funeral accounts remains on deposit and is used to offset inflation as time passes.

The following are a few excerpts from the N.Y.S. Irrevocable Trusting

  • All preneed funeral agreements for applicants for or recipients of Medicaid must be irrevocable.
  • No other type of preneed contract may be irrevocable. All others remain completely revocable for the purchaser, which means moneys must be refunded upon demand.
  • There will be one irrevocable account with an unlimited dollar amount for SSI / Medicaid applicants or recipients.
  • Irrevocable burial trust Purchasers may not receive a refund prior to the death of the beneficiary, at which time the money must either be spent on funeral expenses or be paid to the county Social Services Department.
  • All irrevocable accounts must remain portable to any funeral home in any state, and upon the purchaser's request, the moneys must be paid to a newly selected funeral home or funeral trust within ten business days.
  • All preneed agreements for applicants for or recipients of SSI / Medicaid must contain a mandatory disclosure regarding the nature of the irrevocability of the contract and the portability aspects.
  • All literature printed after January 1, 1997 which promotes prefunded funerals must contain language disclosing the irrevocable nature of preneed agreements executed by applicants for or recipients of SSI /Medicaid.