Glossary
What is funeral trust?
A funeral trust is a legal arrangement that holds money set aside to pay for funeral or burial expenses. Often used to fund a preneed plan, it keeps the money protected and earmarked, and when made irrevocable may be excluded from Medicaid asset limits.
With a preneed plan, your payment can go into a trust that the funeral home draws on when the time comes. An irrevocable funeral trust cannot be changed or refunded, which is what allows it to be excluded from Medicaid eligibility calculations in many states.
Trusts are one way to fund a funeral in advance; final-expense insurance is another. Compare portability, refunds, and what happens if the funeral home closes.
Related terms
Preneed
Preneed, or pre-need, refers to arranging and often paying for funeral or cremation services in advance, before death. A preneed plan lets a person choose their arrangements ahead of time and can lock in or set aside funds to cover the cost.
Final expense insurance
Final expense insurance is a small whole-life insurance policy, usually $5,000 to $25,000, designed to cover funeral, burial or cremation, and final bills. It pays a cash benefit to a named beneficiary and is also called burial or funeral insurance.
At-need
At-need refers to funeral arrangements made at the time of death, when a family plans and pays for services right after a loved one dies. It is the counterpart to preneed, or pre-planning, which is arranging and often paying in advance.
Common questions about Funeral trust
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This definition is general information, not legal or financial advice. Laws and prices vary by state and provider. See our editorial standards.