Supplemental Nutrition Assistance Program (SNAP) Manual – Table of Contents

1110.020.17 Prepaid Burials

IM-#14 February 23, 2007

Irrevocable preneed burial contracts (prepaid burials) are excluded as a resource. Revocable and irrevocable preneed burial contracts funded by the assignment of life insurance are not an available resource because they have no value during the applicant’s lifetime.

Up to $1,500 of each EU member’s equity cash surrender value (CSV) in revocable prepaid burials is excluded. The equity value in excess of $1,500 is counted as a resource to the EU.

Prepaid burial contracts are entered on the Prepaid Burial (FMW1) screen. Enter all prepaid burial contracts and record whether the contract is irrevocable and if there is a CSV. FAMIS excludes based on the policy.

The following explains the types of prepaid burials authorized in state law and what amounts are recoverable. Refer to Documenting Life Insurance and Prepaid Burials in the General Manual.

Section 436.010 – 436.080 Laws of Missouri, 1965, established a new section in the Missouri laws relating to the sale of personal property or services under prearranged funeral agreements, contracts, or plans, regulating the disposition and handling of moneys paid thereunder, and providing penalties for the violation thereof. Subsection 1 of the law provides that any agreement, contract, or plan for prepaid funeral or burial services is hereby declared against public policy and void, unless all money paid thereunder is handled in accordance with the provisions of this act, and subject to the terms of a written agreement not in conflict therewith. The law defines the term funeral merchandise and specifies some of the contents of such a written agreement that must be present if the contract is valid, if it is dated on or after October 13, 1965.

In order to determine the equity a claimant has in money that has been paid to or deposited as an advance payment for such a contract dated on or after October 13, 1965, verify: (a) the amount of money paid for this purpose; and (b) the type of contract purchased from any person or company selling such services, whether on a paid-in-full or time-payment basis.

The law establishes three types of funeral or burial contracts that may be sold and establishes certain conditions that must be met for each one to be a valid contract. The following is a brief statement of the major points to identify in determining contract type.

  • This agreement provides that all payments are to be deposited in a joint account under the joint names and joint control of the purchaser and seller. The purchaser may request withdrawal of the funds held in the joint account at any time. When such request is made, the seller must cooperate in making the joint withdrawal, but the purchaser receives only 90 percent of the amount paid in while the seller retains the other ten percent. This amount must be shown as a resource.
  • This agreement allows the seller to deposit all payments received over and above an amount equaling 20 percent of the total amount agreed to be paid, in an account in the name of the seller as trustee. The purchaser may request cancellation of this contract prior to maturity but receives only the amount actually paid over and above 20 percent of the total amount for which the contract was written. This amount must be shown as a resource.
  • This agreement allows the seller to retain as his/her own money all funds collected until receipt of 20 percent of the total amount agreed to be paid. All additional payments must be deposited by the seller in the trust department of a state or national bank with trust powers, to be held for the use and benefit of the purchaser. The account is carried in a trust fund in the name of the seller, but the bank becomes the trustee with power to invest the funds. The purchaser may request cancellation of this contract prior to maturity but receives only the amount actually paid over and above 20 percent of the total amount for which the contract was written. This amount must be shown as a resource.

In arriving at the EU member’s equity under either of the three types of contracts, the value is the total of all payments made exceeding the amount to which the seller is entitled upon cancellation. Any interest earned by such deposited funds belong to the seller.

Always review the Financial Resource Detail Summary (FMWG) screen prior to authorizing a case action to ensure resources you expect to be included are included in the determination. From the Action Authorization (FM3H) screen, press F15=RESOURCE to view the Financial Resource Detail Summary (FMWG) screen. If the resource is incorrect, select the resource and press F6=DETAILS to return to the appropriate screen and correct the inaccurate information.