Kansas Medicaid Burial Trust: Irrevocable Funeral Plans and Exempt Limits

Why Burial Trusts Matter for Medicaid Eligibility

With a $2,000 countable asset limit for Medicaid long-term care in Kansas, families need to convert excess cash into exempt categories. An irrevocable prepaid burial trust is one of the most straightforward spend-down tools available — it shelters real money from the asset test while prepaying a genuine future expense.

But the rules are specific, and a burial arrangement that does not meet Kansas requirements remains a countable resource.

The K.S.A. 16-303 Irrevocable Funeral Trust

Kansas statute K.S.A. 16-303 governs irrevocable funeral trusts. To qualify as an exempt asset for Medicaid purposes:

The trust must be irrevocable. The depositor cannot cancel the arrangement, withdraw the funds, or change the terms. A revocable prepaid funeral plan — where the parent could theoretically get their money back — is counted as an available resource.

Basic services are capped at $7,000. The exempt amount for general funeral services (embalming, preparation, ceremony, transportation) is limited to $7,000 per person.

Burial space items are unlimited. Here is where the real planning value lives. Amounts designated specifically for "burial space items" have no statutory cap. Burial space items include:

• Casket or urn
• Grave vault or outer burial container
• Cemetery plot or mausoleum space
• Headstone or grave marker
• Opening and closing of the grave
• Perpetual care and cemetery maintenance fees

A family can establish a $7,000 trust for funeral services and then add $10,000, $15,000, or more for burial space items — all of it exempt from the Medicaid asset test. The key is that funds designated for burial space items must be specifically earmarked in the contract for those items, not lumped into the general service category.

How to Set Up a Compliant Burial Trust

Work with a licensed Kansas funeral home or mortuary to establish the prepaid arrangement. The funeral director creates the irrevocable trust agreement, which is then funded by the parent or family.

Timing matters. The burial trust must be established and funded before the Medicaid application is filed. Funding a burial trust after the application is submitted can be treated as a transfer for less than fair market value — the parent is converting a countable asset into an exempt one during the eligibility determination.

Each spouse can have their own. For married couples, both the applicant and the community spouse can each have an irrevocable burial trust — doubling the exempt amount.

The trust grows tax-deferred. Interest earned on the trust principal remains in the trust and does not count as income for Medicaid purposes. Over time, the trust value may exceed the original deposit, but the growth is not counted as an asset or income.

Revocable Burial Funds: A Smaller Exemption

Kansas also allows a smaller exemption for revocable burial funds — up to $1,500 per person in a dedicated burial account. Unlike the irrevocable trust, the parent retains access to this money, so the exemption is limited.

The $1,500 revocable burial fund is a separate category, but its available exemption can be reduced by other burial arrangements and exempt life insurance. Do not assume the full $1,500 can be added to an irrevocable trust.

Life Insurance and Burial Funding

Life insurance policies interact with burial trusts in two ways:

Policies with a face value of $1,500 or less are exempt from the Medicaid asset test regardless of cash surrender value.

Policies with a face value above $1,500 have their cash surrender value counted as a resource. One common spend-down strategy is to irrevocably assign a life insurance policy to the state Medicaid program, which can make the policy an exempt resource. This is done using Form ES-3171 (Irrevocable Collateral Assignment of Life Insurance) through the KanCare Clearinghouse.

Common Mistakes

Making the trust revocable. Some funeral homes offer prepaid plans that are revocable by default. If the arrangement is not explicitly irrevocable in the contract language, Medicaid counts the full balance as an available resource.

Not separating services from burial space items. Lumping everything into a single $7,000 category leaves money on the table. The contract should itemize services (capped at $7,000) separately from burial space items (no cap).

Funding too late. A burial trust funded after the Medicaid application is filed — or during the period when countable assets already exceed the $2,000 limit — can draw scrutiny. The spend-down sequence matters.

The Kansas Medicaid Long-Term Care & Asset Protection Guide includes a burial trust funding checklist and a spend-down sequence planner that shows where the irrevocable burial trust fits in the overall asset restructuring timeline.

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