Answers to Your Funeral Trust and Medicaid Planning Questions
Navigating Wisconsin's complex asset protection landscape requires specialized knowledge. Our experienced financial consultants have compiled answers to the most frequently asked questions about funeral trusts, Medicaid planning and asset protection strategies.
Funeral Trust Planning Questions Answered
What is a funeral trust and how does it work?
A funeral trust is a financial arrangement designed to set aside funds for funeral and burial expenses. At Refi Trust, our funeral trusts are insurance-backed vehicles that protect dedicated funds from Medicaid spend-down, creditors, and other financial threats. The trust holds funds until needed, at which point they're distributed directly to the funeral home within 48 hours.
Are funeral expenses tax deductible in Wisconsin?
While funeral expenses themselves are generally not tax-deductible on individual income tax returns, our funeral trust solution offers several tax advantages. The trust's proceeds are not considered taxable income to beneficiaries, and the trust structure avoids probate and associated costs. For specific tax situations, we recommend consulting with a tax professional regarding your unique circumstances.
What's the difference between a burial trust and a funeral trust?
Though often used interchangeably, burial trusts typically focus narrowly on cemetery and burial plot expenses, while funeral trusts cover the complete range of funeral services, including transportation, casket, service costs and cemetery expenses. Our comprehensive solution encompasses all end-of-life expenses through a single protected vehicle.
How does a funeral trust differ from prepaid funeral plans?
Prepaid funeral plans are typically arrangements with specific funeral homes that lock you into their services and prices, often with limited flexibility. In contrast, our funeral trusts offer:
- Complete flexibility to choose any funeral home
- Superior asset protection from Medicaid and creditors
- Greater protection amounts ($15,000 immediate protection vs. typical $4,250)
- Refundability to your estate if costs are lower than anticipated
Medicaid Planning Questions for Wisconsin Residents
What are Wisconsin's Medicaid asset limits for 2025?
Wisconsin Medicaid limits individuals to $2,000 in countable assets ($3,000 for couples applying together). The monthly income limit is $1,304.17 (2024 figure, pending 2025 updates). Countable assets include cash, bank accounts, investments and cash value life insurance, while exempt assets include your primary home (up to $713,000 equity), one vehicle, personal belongings and properly structured funeral trusts.
How does the Medicaid 5-year lookback work in Wisconsin?
Wisconsin Medicaid reviews all financial transactions from the 60 months preceding your application. Gifts or transfers for less than fair market value during this period may result in a penalty period during which Medicaid won't cover nursing home costs. The penalty is calculated by dividing the gift amount by the monthly penalty divisor ($13,863 in 2024). However, transfers to certain exempt assets, including funeral trusts, are permissible without penalty.
How does Wisconsin Medicaid estate recovery work?
After a Medicaid recipient passes away, Wisconsin may seek recovery of benefits paid from the deceased's estate. This can include probate assets and, in some cases, the home. However, proper planning—including funeral trusts and other strategic measures—can help protect assets from estate recovery while complying with all regulations.
Life Insurance and Policy Conversion Questions
How do I transfer ownership of my life insurance policy to a funeral home?
Rather than directly transferring your policy to a funeral home (which limits your options and control), our approach converts your life insurance policy's cash value into a protected funeral trust. This approach offers:
- Greater protection from Medicaid spend-down
- Flexibility to choose any funeral provider
- Immediate protection without waiting periods
- Return of unused funds to your estate
What happens to my life insurance policy if I need nursing home care?
Without proper planning, your life insurance policy's cash surrender value (above $1,500) is considered a countable asset for Medicaid qualification. This often forces seniors to surrender valuable policies at reduced values or spend down their benefits. Our policy conversion process transforms this vulnerable asset into a protected funeral trust before nursing home needs arise.
Can I cash out my life insurance policy for funeral expenses?
While you can surrender a life insurance policy for its cash value, this approach has several disadvantages:
- An immediate taxable event on any gains
- Exposed funds are vulnerable to creditors and Medicaid
- Loss of the death benefit and original purpose
- Limited protection options once liquidated
Our conversion strategy preserves your policy's value in a protected vehicle designated for funeral expenses without these disadvantages.
Consult with Wisconsin's Trusted Financial Advisors
Every financial situation is unique, requiring personalized guidance to achieve optimal asset protection. Our team of Wisconsin financial specialists provides:
- Free, no-obligation consultations
- Customized protection strategies
- Zero-fee trust establishment
- Coordination with your existing advisors
With over two decades of experience helping Wisconsin seniors protect their assets from healthcare costs and Medicaid spend-down, we offer unmatched expertise in funeral trust planning and asset protection.
Don't leave your financial legacy vulnerable to nursing home costs and complex Medicaid regulations. Contact Refi Trust today for expert guidance on protecting your hard-earned assets.
Secure Your Future Now Call 414-244-9444
Refi Trust is located at 1200 N Mayfair Rd, Wauwatosa, WI 53226. We specialize in funeral trust planning and asset protection throughout Wisconsin.