A burial trust is a way to set money aside for your funeral so that MassHealth does not count it against you. It is one of the few corners of long-term care planning where the rule is clear and the money ends up doing exactly what you intended.
The detail that decides everything is whether the arrangement is revocable or irrevocable. That one word determines whether MassHealth treats the money as still yours or treats it as already committed.
The Asset Limit a Burial Trust Helps You Meet
To qualify for MassHealth long-term care, a single applicant can hold no more than $2,000 in countable assets, and a couple living together in the community no more than $3,000. Those figures come from 130 CMR 520.003, and unlike most numbers in this area they have stayed put for decades.
Nearly everything you own counts toward that limit. Burial arrangements are one of the narrow categories that do not.
Revocable or Irrevocable, and Why MassHealth Only Cares About One
If you prepay a funeral and keep the right to cancel the contract and take the money back, the money is still yours. MassHealth counts it, and it sits between you and eligibility.
If the arrangement is irrevocable, you have given up the right to undo it. The money can only be spent on your funeral. 130 CMR 520.008(F) makes prepaid irrevocable burial contracts and irrevocable trust accounts noncountable for that reason.
The same dollars, at the same funeral home, are countable or noncountable depending on which version was signed. That is the entire decision.
What MassHealth Does Not Count
The burial exemptions in 130 CMR 520.008(F) stack, and they are worth reading separately rather than as one lump.
- Burial spaces. Any burial space for you, and any burial space for an immediate family member. No dollar limit applies.
- A burial fund, capped at $1,500. Either a separately identifiable amount expressly reserved for funeral and burial expenses, or life insurance designated exclusively for them, with a total face value up to $1,500.
- Prepaid irrevocable burial contracts and irrevocable trust accounts. The regulation sets no dollar cap on these.
- The cash surrender value of burial insurance.
That third point is the one people miss. The $1,500 ceiling applies to a burial fund. It does not apply to a properly drafted irrevocable burial contract or irrevocable trust account, which is why the irrevocable version is usually the one that does real work in an application.
Interest and appreciation left to accumulate inside the arrangement are noncountable as well, so long as the money remains usable only for funeral and burial purposes.
Who Actually Holds the Money
Massachusetts is more specific here than most states, and it contradicts a common assumption. The funeral home is not the trustee and does not hold your money.
Under 239 CMR 4.09, when a pre-need funeral contract is funded through a funeral trust account, the funeral establishment must deposit the funds within five business days after the contract’s cooling-off period ends. The account has to name a federal or state chartered banking institution with trust powers, or a trust company within Massachusetts, as trustee. You are named as the beneficiary. The funds may be used only for the goods and services on the itemized statement, and they must be invested and managed under M.G.L. c. 203C, the same prudent investor standard that governs ordinary trusts.
What Happens if Your Family Uses a Different Funeral Home
People arrange a funeral with one establishment and then, years later, the family uses another. The regulation anticipates it. Under 239 CMR 4.09(5)(a), if the contracted funeral home does not provide the services, the trustee pays the account balance to the estate or the legal representative of the beneficiary once it receives a certified copy of the death certificate.
The money is not forfeited to the funeral home. That is worth knowing before anyone signs anything.
What a Burial Trust Does Not Do
It does not protect your house, and it does not shelter savings beyond the cost of the funeral itself. It is not a substitute for planning done ahead of the five-year look-back, and it will not rescue a late application on its own. If the house is the asset you are worried about, that is a different conversation.
What it does is move a real and unavoidable expense out of the countable column, and spare your family from arranging and paying for a funeral in the same week they are dealing with a nursing home. Both are worth having. Neither is the main event.
Where a Burial Trust Fits in a MassHealth Application
In practice this usually comes up near the end of the process, when an applicant is close to the asset limit and needs the last few thousand dollars somewhere that does not count. At that stage it is dependable and it is quick. Earlier in the process there are better tools, and we would rather talk to you then.
Our MassHealth long-term care applications page covers what the rest of the application involves.
If you are working through a MassHealth application and are not sure which pieces still count against you, we do this every week and can walk you through it.
Book a free 15-minute consult call with our Lead Intake Coordinator, Nicole Ott, or give us a call at 978-657-7437. There is no charge and no pressure. The goal is simply to work out what your family actually needs to do next.
