Author: Michelle Lynch

Choosing a Funeral Home

Choosing a Funeral Home

Choosing a funeral director was simple in our grandparents’ day when there was usually just one funeral home in town.

In fact, it is not at all uncommon that a local funeral homeowner – or their relatives – have provided their important services to families in your community for the last several years and even generations.

Today, with our mobile society and family members living all over the country, along with many funeral service options available, selecting a funeral director may take some careful thought and planning.

However, choosing a funeral director is like engaging any other professional such as a lawyer or doctor and doesn’t have to be – nor should it be – a daunting task.

If your family does not already have a local funeral director, consult with your pastor or rabbi for recommendations. You may also consider asking your friends and neighbors. Have you attended a funeral that particularly stood out to you? Visit their funeral home website to learn more about their services and staff.

If you’re not familiar with the funeral homes in your area, you may wish to make an appointment to visit one or more of them. In this way, you can meet with the funeral director, tour their facilities, learn about the different options available to ensure you have a clear understanding of the costs for services and merchandise you may desire.

Find a NYSFDA member funeral homes in your area.

Preplanning for Medicaid/SSI

Preplanning for Medicaid/SSI

Special Consideration for Medicaid/SSI Applicants & Recipients

All citizens – regardless of income – are entitled to and deserving of both a proper funeral service and a burial with dignity and respect. In fact, federal and state laws support this guiding principle in a number of ways.

First, any person applying for Medicaid/SSI can set aside funds for the sole purpose of paying their funeral/burial expenses – as well as the funeral/burial of immediate family members – as part of the spend-down process to Medicaid/SSI eligibility. The funeral/burial funds set aside will not be counted as part of the individual’s financial resources. A Medicaid/SSI eligible individual must first notify his or her caseworker that funds will be set aside to pay their funeral/burial tax expenses.

Second, New York State law requires that 100% of these funeral/burial funds be placed in an irrevocable trust account, ensuring they will be available when needed and used for no other purpose than what they were intended: for the funeral/burial of the account beneficiary.

An applicant/recipient of Medicaid/SSI may also set aside funds in irrevocable funeral trust accounts for the following immediate family members:

  • Spouse
  • Children
  • Step-Children
  • Siblings
  • Parents
  • and spouses of those individuals listed above

Please note that when the original purchaser passes away, the beneficiary (family member) becomes the new purchaser and taxpayer. If there is any excess money in the preneed account after the funeral and burial charges have been paid, the overage will go to the county where the decedent was receiving benefits.

The funds used to establish an irrevocable preneed funeral account must be used only for reasonable and common funeral expenses for such things as professional services, transportation, facilities and merchandise, as well as cash advances to cover the cemetery and other related charges.

Finally, the individual has the right to use any funeral home they choose, and may be changed at any time.

Commonly Asked Questions: Preneed Accounts for Applicants or Recipients of Medicaid/SSI

Q: What happens if I currently have a revocable preneed account, but I am now applying for Medicaid or SSI?

A: When applying for Medicaid/SSI, your caseworker should advise you that the revocable preneed account must be converted to an irrevocable account to ensure that your eligibility for benefits is not jeopardized.

Q: How does my life insurance policy affect my Medicaid eligibility?

A: The face value of any life insurance policy(ies) over $1,500 will be counted as an asset in determining your Medicaid eligibiity.

Q. Can an overage in an irrevocable preneed trust account be used to fund additional services or merchandise?

A: No, If the current account balance exceeds the actual cost of the services and merchandise originally selected, the overage must be returned to the county.

Q: Can my irrevocable preneed agreement be modified at the time of need?

A: Yes. However, the new items must be equal or lesser value, and must qualify as funeral merchandise and services. If there is an overage, the funds may not be depleted to cover additional merchandise and services, but instead must be returned to the county.

Q: Which county Social Services Department receives the overage in an irrevocable trust account?

A: If there’s an overage after the final funeral charges have been paid, the overage must be sent to the county where the recipient was receiving public assistance at their time of death.

Q: Can an irrevocable preneed funeral account be split into separate accounts in New York State?

A: No. The full amount of an irrevocable preneed agreement must be placed into a single preneed trust account.

Q: Which items may not be included on the preneed itemization form for an irrevocable preneed account?

A: As an applicant or recipient of Medicaid/SSI, you may only prearrange “reasonable and common” funeral merchandise and service expenses that are related to the funeral. Examples of items not permitted by NYS Department of Health include: airline tickets, funeral luncheons, charitable donations, and cash gifts. If there are any questionable items, you should speak to a social worker to obtain prior approval.

Q: Who may authorize a transfer of funds to another funeral home?

A: Before death occurs, only the purchaser and his/her legal representative may authorize a transfer of an irrevocable preneed account to another funeral home.

Q: How does the law affect pre-existing contracts of Medicaid applicants and recipients?

A: If you had both a pre-existing agreement and were receiving benefits prior to January 1, 1997, your account may remain revocable, but must still be recertified annually by County Social Services personnel.

How to Preplan

How to Preplan

Preplanning your memorial service is a loving gesture to those you leave behind.

Most importantly, planning ahead of time will relieve your family from having to guess what your wishes were during a very emotional time following your death.

Before visiting a funeral home to discuss your prearrangements, give some thought to your preferences for a celebration of your life.

Try to identify religious elements, songs or readings and personal touches you would like made part of your service.

When you meet with the funeral director, they will guide you through the different services and merchandise available so you can select those that match your personal preferences and beliefs.

Your funeral director will give you a printed copy of their “General Price List” to show the cost of services and merchandise.

This will enable you to create a meaningful service that meets your preferences and financial considerations.

Once the details have been finalized, your funeral director will prepare a preneed agreement and fully itemized statement for your review.

You’ll get a copy to take home with you.

Pre-payment is not required, but it is an easy and secure option should you choose to do so.

In New York State, your funeral director is required by law to deposit your prepaid funds into an interest-bearing government-backed trust account.

The principal – and the interest earned – will remain yours.

It is important to discuss your decision to pre-plan and/or pre-fund your funeral with your loved ones.

Discuss with them which funeral home you have made your arrangements with and consider providing them with a copy of your preneed documents.

There are several pieces of information you want to have handy when you sit down to plan your celebration of life.

Military history, education, life experiences and even your philosophy can all be elements of a meaningful memorial.

What to expect at a prearrangement conference:

NYS law requires the funeral director to provide you with the following:

  • A General Price List with the current prices for any merchandise, services and facilities regularly offered by the funeral home.
  • A Preneed Itemization Statement that lists the items of merchandise, services and facilities that have been chosen, and the price of each.
  • A Preneed Agreement that outlines all the terms, as well as consumer’s rights. It must also state how the principal and interest will be applied to the cost of the funeral services and merchandise at the time they are provided.
  • If prepaying, Written Notice provided within 30 days of payment to identify where the money has been deposited.
Security of Preneed in NYS

Security of Preneed in NYS

The Security of Preneed Funeral Funds in New York State

New Yorkers, like all consumers, understandably want to be sure the funds they set aside in a preneed funeral trust account are safe and secure. The following is a series of fundamentally important questions about the protection of preneed funds.

How does New York State protect preneed funds?

Consumers in New York who prefund their funerals have their money protected by what are truly the strongest preneed laws in the nation.

These laws require that 100% of preneed funds be deposited in an interest-bearing, government backed trust account where the principal and interest earned remain the property of the consumer.

The purchaser remains in control of the preneed account. If the account is revocable, a purchaser may request a full refund of the principal and interest earned at any time, for any reason, without penalty.

The purchaser may also select a new funeral home at any time.

New York State law also mandates full disclosure to the consumer by requiring that written statements be sent containing information on the funds deposited to date, where they are deposited and the amount of interest earned.

Under New York State law, applicants or recipients of Medicaid or Supplemental Security Income (SSI) may set aside funds in an irrevocable trust account for the sole purpose of paying their funeral and burial expenses, and those of their family members.

The funds in an irrevocable funeral trust are exempt from being counted as a resource when determining eligibility. By law, funds in an irrevocable trust account cannot be refunded, but the purchaser may select a different funeral home at any time.

What is the difference between a revocable preneed account and an irrevocable preneed account?

In New York State, an individual applying for Medicaid or SSI may set aside funds in an “irrevocable” account for their – and their family members’ – future funeral/burial expenses.

These funds are considered an excludable asset in determining program eligibility.

Funds set aside in an irrevocable account may not be refunded and any funds remaining (“overage”) in the account after payment is made for all funeral services and merchandise provided must be forwarded to the county where the beneficiary was residing at the time of death.

In contrast, a revocable account in New York State is fully refundable upon demand. Any overage remaining in a revocable account after the funeral services and merchandise have been provided must be forwarded to the beneficiary’s estate.

Both irrevocable and revocable preneed accounts allow a change to a different funeral home, even if in another state, without penalty at any time.

May a funeral director charge a fee for planning a prepaid funeral?

No, in New York State, funeral directors cannot charge any fee for prearranging a funeral.

Are there any fees associated with planning a prepaid funeral?

Yes, all preneed funeral trusts, are permitted by law to assess a fee of (.0075%) of the principal sum in the fund to provide management and administrative services to operate and staff the fund. A minimal fee is also paid for the expert investment advice given to PrePlan for the benefit of its customers.

Of course, these terms are fully disclosed in the preneed agreements.

What happens if the funeral home closes?

In the event of a funeral home closing, NYS law requires that all account holders be notified in writing within 30 days.

Fortunately, preneed funds are forwarded to an interest-bearing account with a separate financial institution in the purchaser’s name. The purchaser remains in control of those funds at all times.

They may then choose to transfer the funds in their preneed account to another funeral home or, if it is a revocable agreement, they may request a refund of their deposits plus all interest earned.

The New York State Health Department Bureau of Funeral Directing regulates funeral service and may be of assistance.

Pre-planning Vs. Pre-funding

Pre-planning Vs. Pre-funding

Wondering what the difference is between pre-planning and pre-funding a funeral?

Pre-planning a funeral involves making decisions on the service (music selection, readings, burial options, etc.). Many people think of funeral planning as part of their estate planning.

Pre-funding involves setting aside money to cover the costs of the funeral in the future. You can either pay the full amount or arrange a payment plan with the funeral home.

Many people often choose to both pre-plan and pre-fund their funeral when meeting with a funeral home.

Why Pre-plan a Funeral?

  • Make personal and specific selections for the funeral service that most closely meets your preferences and reflect your life’s story.
  • Prevent your loved ones from second-guessing your wishes after you die.
  • Take the time to research funeral homes, burial options, and financial considerations.
  • Consider the option to set aside funds for final expenses, relieving family members of an unexpected financial burden.

Learn more about Preplanning a funeral and what to expect.

Why Pre-fund a Funeral?

There are a number of benefits to pre-funding a funeral:

  • Place the cost of the funeral (at today’s prices) in an investment vehicle that will earn interest to keep pace with inflation to cover the cost of the funeral (at future prices) when the death occurs.
  • Prevent life insurance policies from being depleted at the time of death.
  • Consider options at your own pace to make sound, fiscally-responsible decisions.
  • Spare your loved ones the unexpected cost of a funeral during a highly emotional time.
  • Medicaid/SSI recipients may set aside money to fund the funeral service of their choice as a part of the “spend-down” process to meet eligibility limits.

New York State as the strongest preneed trust laws in the nation. Learn more.

Why Trust PrePlan

Why Trust PrePlan

The Gold Standard. Our Promise to You.

For over 30 years, PrePlan has served as New York’s leading pre-funded funeral trust administrator. As a funeral director, families trust you to make important choices on their behalf to ensure the safety, security, and compliance of their funds.

This is how PrePlan protects you, your funeral firm, and your families’ assets:

  • Funds are 100% government-backed and we consider each investment decision carefully
  • Quarterly audits conducted by an independent firm ensures all investments are fully secure and compliant, checks and balances are in place, and all legal requirements are met
  • Knowledgeable and experienced staff well-versed in New York State preneed law and Medicaid/SSI compliance issues
  • Accredited by the Better Business Bureau, PrePlan proudly holds an A+ rating
  • Only funeral trust created by New York funeral directors for New York funeral directors

Trust PrePlan

When you expect your preneed trust accounts to be secure, compliant, convenient, you expect the Gold Standard. With PrePlan, your families’ preneed funds are 100% government backed. And an independent firm conducts quarterly audits ensuring all investments are fully secure and properly managed. Plus, our knowledgeable and experienced staff is well-versed in New York State preneed law and Medicaid/SSI compliance issues. The Gold Standard. That’s our promise to you.

FAQs

FAQs

How can I be sure the funds in my PrePlan account are safe and will be there when they are needed?

Consumers in New York who prepay their funeral expenses enjoy the full benefit of having their funds protected by the strongest preneed laws in the nation. These laws require that 100% of your preneed funds be deposited into an interest-bearing, government backed trust account.

In addition, PrePlan works on behalf of its member funeral homes and their consumers by investing solely in certificates of deposit with a diversified group of highly-rated banks. Each accountholder in PrePlan is federally insured.

Preplan also voluntarily submits the trust fund to an annual audit to ensure the transparency and accuracy of our reporting.

Following are some commonly asked questions and answers specific to your PrePlan trust account. If you have any additional questions, please contact the funeral home with which you set up your account.

Who actually owns the funds in a preneed account?

Until the funeral home has provided the merchandise and services, the purchaser whose funds were used to open the account remains in control of the account and can change arrangements and/or their choice of funeral home at any time. If the account is “revocable,” a purchaser may request a full refund of the principal and interest earned at any time, for any reason, without penalty.

My mother is applying for Medicaid; can she set aside funds by opening a preneed account to pay for her future funeral and burial expenses?

Yes, New York State allows an individual applying for Medicaid or Supplemental Security Income (SSI) to set aside funds in an “irrevocable” account for these very expenses. These funds are considered an “excludable asset,” meaning they are not counted as a resource when determining eligibility. However, any funds set aside in an irrevocable account may not, by law, be refunded to the purchaser. In addition, any overage in funds remaining in the account after expenses are paid must be sent to the appropriate department of the county where the beneficiary was living at the time of his/her death.

A Medicaid/SSI applicant also has the option of setting funds aside to pay the funeral/burial expenses of certain family members. Any account established for the benefit of a family member must, under New York State law, also be irrevocable, as any and all funds in such account would be an “excludable asset” as well.

If my account is “revocable” and there is a balance left after my funeral expenses have been paid, where does this overage go?

Any funds remaining in a revocable account must be remitted to the purchaser, if different from beneficiary, or to the estate of the beneficiary (decedent).

What happens if the funeral home I make arrangements with goes out of business?

The funeral home must, by law, inform each individual who has prefunded a funeral with them of this fact. They must also advise the consumer of their right to transfer their prearrangements to any other funeral home they choose, or, if revocable, receive a refund of their total deposited amount plus all interest earned.

I received my annual Grantor Trust Tax Information Statement from PrePlan; what amount do I report on my taxes for interest income?

It is the “Gross Taxable Interest” amount as printed on the trust tax statement that must be reported on your income tax return. For more tax information, including tax reporting terms, click here.

What are the fiduciary and advisory fees disclosed in my preneed agreement for?

As with any trust in New York State, PrePlan is permitted by law to expend up to three quarters of one percent of the balance in the fund to provide the necessary services to operate and staff the trust. This is one of the lowest fees in the nation. In addition, a minimal advisory fee is also paid for the expert investment advice given to PrePlan for the direct benefit of its customers. These terms are fully disclosed in the preneed customer agreement provided to all customers.

Is PrePlan accredited by the Better Business Bureau?

Yes! PrePlan is proud to have earned an “A+ excellence rating” by the highly regarded Better Business Bureau (BBB). This designation was awarded following a successful review and BBB background check. With the strongest consumer laws in the nation and BBB accreditation. New York State consumers can be confident that their prepaid funeral funds are well protected with PrePlan.

Join PrePlan

Join PrePlan

Getting Started

For over 30 years, PrePlan has served as New York’s preeminent pre-funded funeral trust administrator. Our knowledgeable and confidential staff are well-versed in New York State law and have been supporting NYSFDA members for decades.

Interested in joining PrePlan? Email preplan@preplan.org and request an information packet. Remember, you must first be a current, active member of the New York State Funeral Directors Association (NYSFDA). Learn more about NYSFDA membership.

Transfer Existing Preneed Accounts

If you’re interested in transferring existing preneed trust accounts to PrePlan, our administrators will work with your firm to make a smooth transition.

Whether opening or transferring accounts, contact us today: 800.577.3752 or preplan@preplan.org.

Ensuring Accounts are Secure

As a funeral director, families trust you to make important choices on their behalf. When selecting a preneed funeral trust administrator, you need to ask some important questions before deciding where to invest your families’ funds. As their trusted advisor, it’s your responsibility to ensure their funds are safe, secure, compliant. View this quick video to learn more.

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