Education Article — Precompose

Making Your Precompose Trust Irrevocable

This optional step is most often utilized for Medicaid eligibility 

When you purchase a Precompose plan, you are purchasing a trust. By default, that trust is “revocable,” meaning you can receive a refund for 90% of the money you have paid at any time prior to services being administered. You also have the option to make the trust “irrevocable,” which means you give up the right to ask for a refund or make changes to the trust.

The most common reason to make a trust irrevocable is so that you or the recipient of the trust can qualify for Medicaid benefits. If neither you nor the recipient of the trust (if not yourself) is seeking to qualify for Medicaid, making your Precompose trust irrevocable is probably not the best financial decision. If you do not wish to make your trust irrevocable, no action is needed. If you wish to make your trust irrevocable, contact us.

Revocable vs. Irrevocable Trusts 

If you do not make the Precompose trust irrevocable, Medicaid could possibly take funds from the recipient’s Precompose plan if they are in treatment and their other assets have been depleted. Medicaid could also take funds from your recipient’s Precompose plan if you, the purchaser, are in treatment and your other assets have been depleted. If the trust is still revocable, you are still able to access and use those dollars. Similarly, creditors can reach funds in revocable trusts, but typically not irrevocable ones.

If you are purchasing a Precompose plan for another person, be sure to verify your purchase will not impact their Medicaid benefits or be claimed by their creditors. Be aware that it may appear to be an asset for you if you are seeking Medicaid benefits or have creditors seeking to take your assets.

Making your trust irrevocable is a decision that cannot be reversed. Also, you can choose to make your Precompose trust irrevocable at any future date. We recommend you do not make your trust irrevocable until you are certain of your choice.

Making a Trust Irrevocable to Qualify for Medicaid

If a funeral trust like Precompose is made irrevocable, it will not be counted as an asset by Medicaid. If you are seeking to qualify for Medicaid, the purchase of Precompose allows you to transfer control of some of your funds to the Precompose trust in order to meet the Medicaid threshold. Your purchase of a Precompose trust does not violate the look-back period, which states an individual cannot transfer assets within a certain time period of qualifying for Medicaid (the period includes the previous 60 months in most states). Medicaid benefits vary by marital status and by state, and can change each year.

Other benefits may also be impacted by your purchase of a Precompose trust, including Supplementary Security Income (SSI). Please consult, your state’s Medicare provider, and your benefit administrator to confirm how establishing a funeral trust may impact your eligibility.

If you have questions about making your Precompose trust irrevocable, please contact us at [email protected] and a member of our team will get back to you shortly.

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