Planning: Irrevocable Burial Contracts

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Funerals are a part of life, instead of letting those who are dealing with loss worry about the financial aspects plan ahead with pre-paid burial plans. This helps make your own plans a reality and take the stress of those grieving. Here is one option.

What is an irrevocable burial trust?

Any plan for the future should include planning and this includes funeral insurance. This helps your family when the time comes and can give you a lot of peace of mind. That is why you should consider an irrevocable burial trust. This is where the irrevocable burial trust enters the picture. Here is a great resource for 

funeral rocks


Irrevocable burial trusts (or I. F. trusts) is a situation where you set aside a specific amount of money (a trust) for your burial. Just like any other trust, a burial trust just allows you set aside money for a specific purpose, in this case, your funeral and burial expenses. What makes the burial trust irrevocable is the fact that it cannot be changed, reversed, or dissolved. Therefore, you know that once you set aside the money for your burial, it will always be there waiting.


But, it is important to remember that with these types of trusts not even you can dissolve or remove the money once it is set up. So, don’t expect to be able to take the money out of an irrevocable burial trust in the future, it will not be possible. However, you will get special tax treatment, which is a large advantage for some people.


The irrevocable burial contract

The irrevocable burial contract is the document that sets up your irrevocable burial trust. You can purchase an irrevocable burial contract even if you have Medicaid. To learn more about Medicaid and irrevocable burial contracts, visit here.


Is an irrevocable burial contract cancelable

No, the irrevocable burial contract is not dissolvable or cancelable once it is set up. That is the biggest drawback to this type of burial contract. If you want a burial trust that is cancelable, you should look into a revocable burial trust.


Are irrevocable burial plans transferable

Yes, the irrevocable burial contract can be transferred from one funeral home to another.  

How does an irrevocable funeral trust affect Medicaid eligibility?

There are a couple of ways that an irrevocable funeral trust can impact your Medicaid eligibility. The most important is that you can use the irrevocable funeral trust to reduce your assets, which will then allow you to be eligible for Medicaid. Because an irrevocable funeral trust cannot be dissolved, it does not count as an asset when applying for Medicaid.

However, keep in mind that each state has its own rules as to the amount of money you can place in your irrevocable funeral trust. Plus, not all funeral trusts work the same way for Medicaid eligibility. In this instance, we are only discussing irrevocable funeral trusts. If you have any other questions about how irrevocable funeral trusts impact Medicaid eligibility, make sure to discuss them with a licensed financial planner.

flowers burial

What are the benefits of buying an irrevocable funeral trust vs. a revocable prepaid burial contract

As we’ve already mentioned, irrevocable funeral trusts have a lot of benefits. They allow you to remain Medicaid eligible—or they could increase your Medicaid eligibility. Plus, they cannot be dissolved, which means that the money will always be there when your family needs it.

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On the other hand, revocable prepaid burial contracts provide more flexibility. They can be dissolved, and you will get the majority of your money back. This is a safer bet for many people because if you run up against hard financial times, you can use the money in your revocable prepaid burial contract. But, keep in mind that many states may count this type of burial contract as an asset on a Medicaid application.

When or Who Should not Purchase an Irrevocable Funeral Trust

Irrevocable funeral trusts are really ideal for someone looking to qualify for Medicaid. If you are not trying to qualify for Medicaid, it would be better to find another way to pre-pay for your funeral expenses. For example, final expense insurance may be a better option for people in this situation. We will discuss final expense insurance below and in the next article.

What expenses are eligible under an irrevocable funeral contract

Not all funeral expenses are covered in an irrevocable funeral contract. You can create an irrevocable funeral contract for small items, like burial space items. These include caskets, urns, vaults, plots, headstones, etc. To still qualify for Medicaid, these expenses can be purchased in an irrevocable funeral contract for you, your spouse, your children and their spouses, and your parents.


You can also purchase a larger irrevocable funeral contract that provides more burial funds. This type of contract covers body transportation, embalming or cremation, flowers, clothing, funeral services, and all other expenses associated with the funeral itself.

Is final expense insurance the same as an I. F. Trust?

Although both allow you to pre-pay for your funeral expenses, final expense insurance, and an irrevocable funeral trust are not the same thing. As we mentioned an irrevocable funeral trust is a separate account that you set up specifically for funeral expenses. It cannot be dissolved or canceled once it is issued, and it may allow some people to better qualify for Medicaid.


On the other hand, a final expense insurance policy is similar to a small life insurance policy. This is part of your insurance portfolio. It will be less than a life insurance policy, but it will be underwritten and function much like any other insurance policy you own. Plus, final expense insurance is not Medicaid exempt in most states. So, this is not a good choice for people looking to qualify for Medicaid. In that instance, it would be better for you to stick with an irrevocable funeral trust.

Final Expense Insurance

What is Final Expense Insurance?

Final expense insurance is a specific type of life insurance policy but is typically worth less than a typical life insurance policy. These are provided by an insurance provider and underwritten like any other insurance policy. Most final expense insurance policies are easy to set up and you can easily dissolve or cancel them at any time. These policies are designed to help your loved ones cover the cost of your funeral and burial.

Do you need Final Expense Insurance?

Not everyone needs to prepay for their funeral and burial, but there are some groups of people that could benefit from a final expense insurance policy. The following person may want to consider final expense insurance.


  • Someone over forty.
  • If you are on a tight budget. Final expense insurance policies tend to have more affordable premiums.
  • Looking for an account that accumulated value over time.
  • You don’t have certain preexisting health conditions like AIDS or terminal illness. Typically, these people will not qualify for final expense insurance.
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Is Final Expense Insurance guaranteed?

There are two main types of final expense insurance: simplified whole life and guaranteed life insurance. Bother types of final expense insurance work in similar ways. Also, both types of final expense insurance are guaranteed as long as the premiums are paid on time. That is a big advantage for people who may not be able to qualify or have funds for traditional life insurance.


Do I need a medical exam?

No, neither guaranteed life or simplified whole life final expense insurance requires a medical exam. You will have to fill a questionnaire that verifies you don’t have a terminal illness. But, otherwise, you do not need to go through the medical examinations needed for traditional life insurance.

Do life insurance policies have burial expenses included?

The answer to this question depends on the type of life insurance you purchase. Some policies will include funds for burial expenses, but others do not. Make sure to read the fine print carefully on your life insurance policy. If burial expenses are not included, and you cannot easily create a smaller policy for them, you may want to consider also setting up final expense insurance.

Final expense insurance vs. term life insurance

Term life insurance is not the same as final expense insurance. Where final expense insurance covers the burial costs of your funeral and is typically set up for less than $20,000, term life insurance does not do this. Term life insurance has a fixed “term.” If you pass away during the term, your beneficiaries receive all of the benefits of the policy. However, if you outlive your policy you will need to set up another life insurance policy. Regardless, make an informed decision and make sure you get good life insurance.


Which is more cost-effective?

At the moment, term life insurance will probably cost you less than final expense insurance. But, because final expense insurance lasts as long as you need, it will provide the largest benefit if you live for a long time after the policy is activated.


Both final expense insurance and term life insurance have less expensive premiums than whole life insurance, which makes them great options for people on a budget. But, you will want to discuss which type of policy will give you the greatest benefit over the rest of your life with your financial advisor.

How to decide which to get

If you are still confused about which type of insurance to purchase, keep the following things in mind.


  • If you need insurance that does not require a medical exam, you will want to consider final expense insurance.
  • If you have other savings available, then you will want to consider final expense insurance.
  • Depending on your age and health, term life insurance may work for you. Just make sure to purchase a policy that allows you to renew the term if you outlive it.


In conclusion, final expense insurance is great for people who want a lifetime policy that provides help for burial costs in the event of their death. If you are looking for more comprehensive insurance, then you need to consider a term life insurance or whole life insurance policy.