Sara Guida, The Funeral Trust Gal
Funeral trusts: prepay the funeral and protect Medicaid eligibility
An irrevocable funeral trust sets money aside for your parent's funeral. It's considered an exempt asset for Medicaid in most states, and your family won't have to pay the bill.
Funeral trusts explained by Sara
Watch a short walk-through of how a funeral trust works and who it helps most.
$7,500+
is the average cost of a U.S. funeral, and it can run $10,000 or more.
1 to 2 days
is the typical time for a funeral trust to pay the funeral home, with no death certificate required.
$2,000
is the Medicaid asset limit for a single person in most states.
Sources: national funeral cost data and state Medicaid rules, 2026. Typical ranges. Timelines vary by provider and state.
What is a funeral trust?
A funeral trust holds money set aside to pay for a funeral, burial, or cremation. Once it's irrevocable, it can't be cancelled or cashed out. Because your parent no longer owns that money, it's considered an exempt asset for Medicaid in most states.
Many funeral trusts are funded with a life insurance policy owned by the trust. When your parent dies, the trust pays the funeral home your family chooses.
Funeral trust
Burial trust
Irrevocable funeral trust
Who it helps most
- A parent applying for Medicaid who is over the asset limit.
- A parent already in a nursing home and spending down.
- A married couple where one spouse needs care.
- Families who don't want to pay for a funeral out of pocket.
How a funeral trust helps your parent qualify for Medicaid
Here's a simple example for a single parent in a state with a $2,000 asset limit.
Without a funeral trust
$14,000
Countable savings
Over the limit by $12,000. Not eligible yet.
With a $12,000 funeral trust
$2,000
Teal: in the funeral trust, not counted. Pink: countable savings.
At the limit. The asset test is met, and the funeral is paid for.
A funeral trust is not a gift, so it doesn't trigger Medicaid's 5-year look-back penalty. Income and medical rules still apply.
How a funeral trust works, step by step
1
Choose an amount
Pick a reasonable amount for the funeral your parent wants. Some states cap how much can go in, and many require an itemized list of goods and services.
2
Fund the trust
Your parent moves money into the trust, often through a single-premium life insurance policy the trust owns. The trust is irrevocable from that point on.
3
Keep the paperwork
Give a copy to the family and include it with the Medicaid application as proof the money is set aside for the funeral.
4
The family uses any funeral home
When your parent dies, the trust pays the funeral home the family chooses, usually in 1 to 2 business days. In most states, money left over goes to the state Medicaid program.
What a funeral trust can pay for
Most funeral, burial, and cremation costs qualify. A few items, like flowers and family travel, depend on your state.
- Funeral director and staff services
- Use of the funeral home
- Embalming and preparation
- Casket and burial vault
- Cremation and urn
- Burial plot and cemetery fees
- Headstone or grave marker
- Hearse and limousine
- Clergy and musicians
- Death certificates and obituary notices
- Clothing, hair, and makeup
- Flowers, in some states
Funeral trust vs. pre-need contract vs. burial fund
All three set money aside for a funeral. They differ in flexibility and how Medicaid treats them.
Irrevocable funeral trust
Pre-need funeral contract
Revocable burial fund
Use any funeral home
Yes, anywhere in the U.S.
No, tied to one funeral home
Yes
Price locked in
No, pays what's in the trust
Usually yes
No
Counts for Medicaid
No, if set up correctly
No, if non-refundable
Yes, except about $1,500
Can be cancelled
No
No, if irrevocable
Yes
Risk if funeral home closes
None
Yes
None
Irrevocable funeral trust
Use any funeral home: Yes, anywhere in the U.S.
Price locked in: No, pays what's in the trust
Counts for Medicaid: No, if set up correctly
Can be cancelled: No
Risk if funeral home closes: None
Pre-need funeral contract
Use any funeral home: No, tied to one funeral home
Price locked in: Usually yes
Counts for Medicaid: No, if non-refundable
Can be cancelled: No, if irrevocable
Risk if funeral home closes: Yes
Revocable burial fund
Use any funeral home: Yes
Price locked in: No
Counts for Medicaid: Yes, except about $1,500
Can be cancelled: Yes
Risk if funeral home closes: None
Funeral trust rules vary by state
About half the states cap how much can go into a funeral trust. Before you set one up, check these 3 things.
The limit
State limits range from about $1,500 to no limit at all.
The paperwork
Many states require an itemized list of funeral goods and services to go above a set amount.
Family members
Some states allow funeral trusts to be purchased for immediate family members, like a spouse, children, siblings, or parents.
Michigan and New York use pre-need contracts instead of funeral trusts. Rules change, so confirm your state's current limit before funding a trust.
We had no idea this was even an option. Sara walked us through everything. It was quick, easy, and such a relief.
Mary K., daughter and caregiver
We thought we had time. I wish I'd known about this sooner. It saved us from spending Mom's last savings.
Julie, Nebraska
No lawyers, no funeral home contracts. Just peace of mind.
Mark and Lisa, Iowa
Set up your parent's funeral trust with Sara
Sara helps families set up funeral trusts with no setup fees and no funeral home contract.
- Pays the funeral home in 1 to 2 business days, no death certificate required.
- Works with any funeral home your family chooses.
- Considered an exempt asset for Medicaid in most states.
- Can be set up during a Medicaid spend-down.
Funeral trusts are funded with life insurance and offered through Sara Guida Agency, LLC, a licensed insurance agency. Availability varies by state.
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Funeral trust questions
Is a funeral trust the same as a burial trust?
Yes. Funeral trust, burial trust, irrevocable funeral trust, and funeral expense trust all describe money set aside in a trust to pay for final expenses.
Does a funeral trust count toward the Medicaid asset limit?
It's considered an exempt asset for Medicaid in most states, as long as it's irrevocable and meets your state's rules. That's why families use it during a Medicaid spend-down.
Is it too late if my parent is already in a nursing home?
No. A funeral trust can be set up during a spend-down or right before a Medicaid application. It isn't a gift, so it doesn't trigger the 5-year look-back penalty.
How fast does a funeral trust pay?
Usually in 1 to 2 business days, paid straight to the funeral home, with no death certificate required.
Can we change or cancel the trust later?
No. An irrevocable funeral trust can't be cancelled or cashed out. That's what keeps it from counting for Medicaid.
What happens to money left over after the funeral?
In most states, the state is named as the beneficiary of any leftover funds to repay Medicaid costs. Setting a realistic amount keeps leftovers small.
Can we buy a funeral trust for other family members?
Some states allow funeral trusts to be purchased for immediate family members, like a spouse, children, siblings, or parents. Rules vary by state.
Is there a fee to set one up?
No. There are no setup fees. You choose how much to put in the trust.
Do we need an attorney to set one up?
Usually not. Most families set up a funeral trust with a licensed insurance agent. Talk to an elder law attorney if your parent's Medicaid situation is complex.
Want to know if a funeral trust fits your parent?
Tell me what's going on. Someone will contact you within 1 business day.
Sara Guida Agency, LLC is a licensed insurance agency. Funeral trusts are funded with life insurance. Availability varies by state. This page is for educational purposes only and is not legal, tax, or financial advice. Sara Guida is not an attorney and does not represent any state Medicaid agency.
© 2026 Sara Guida Agency, LLC