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Irrevocable Funeral Expense Trust

The IFET™

Introducing the IFET™ (Irrevocable Funeral Expense Trust). The IFET™ is an estate planning tool designed for middle-Americans to immediately protect assets from creditors, including state Medicaid recovery programs, without creating a divestment or look-back period.* This can be very useful in a crisis spend-down situation where your client needs to qualify for Medicaid or SSI benefits right away.

The IFET™ is a blend between a guaranteed issue life insurance policy, a fixed-interest rate financial investment, and an irrevocable trust. The trust is issued and controlled by an insurance company also being the owner and beneficiary. There are no complicated trust agreements to draft or fees of any kind and can be used in addition to any other trust your client may already have. The process is simple and in many states the assignment to the trust is part of the application.

With any irrevocable assignment, your client will not be able to surrender, loan or receive a premium refund after the free-look period. In addition, your client will not be able to change ownership or beneficiary, nor will they be able to change the policy face amount or plan. Until the irrevocable assignment is effective, the trust will not qualify for exclusion as an asset of the applicant.

 

Medicaid and the IFET™

Medicaid is a jointly funded federal and state program designed to provide long-term health insurance coverage to low-income children, the elderly, blind and disabled, including nursing home care for those who qualify financially. Each state operates its own Medicaid system but the system must comply with federal government guidelines in order for the state to receive federal money, which covers about half the cost of the program for each state.

Medicaid is often viewed as a form of welfare because in order to be eligible to receive Medicaid benefits, you must be considered impoverished under the guidelines of the program. Unfortunately, many “middle American” families will unnecessarily impoverish themselves for no better reason than lack of knowing or understanding the Medicaid eligibility guidelines. When qualifying for Medicaid, a Department of Health and Family Services agent will take an inventory of the applicant’s assets; referred to as resources, and categorize them into three categories. The three categories are: (1) Countable, (2) Unavailable, and (3) Exempt. When trying to preserve assets in the event of a Medicaid spend-down, one of the strategies is to reposition as many “countable” resources as possible into the “unavailable” or “exempt” category. In many states, the IFET™ is considered an “exempt” resource.* So, whether it’s a crisis situation, where the client needs to apply for Medicaid now or a pre-planning situation, look to the client’s “countable” resources column for the asset/s to reposition into the IFET™.

The Key to Conserving a Lifetime of Savings and Investments – understanding the Medicaid benefit qualification guidelines.

The goal – to educate you on how to conserve your client’s assets legally, and qualify them for benefits before they become impoverished.

The Strategy – reduce or eliminate “Countable” resources by converting them to an “Unavailable” or “Exempt” resource.

This is where the IFET™ comes into play. Currently, many states consider the IFET™ an “Exempt” resource/asset when it comes to Medicaid qualification. Contact FuneralExpenseTrust.com to receive state specific IFET™ rules and investment limitations.

 

How the IFET™ Works

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IFET™
Irrevocable Funeral Expense Trust

  • Funeral Expenses paid first – excess funds paid to the Estate of Insured
  • Medicaid Exempt – immediately
  • $15,000 Maximum investment
  • No Trust or administration fees
  • Funded with "guaranteed issue" life insurance
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IFETplus
Irrevocable Estate Planning Trust

  • Funeral Expenses paid first – excess funds paid directly to named beneficiaries
  • Medicaid Exempt – after five years
  • $50,000 Maximum face value
  • No Trust or administration fees
  • Funded with "guaranteed issue" life insurance
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Guaranteed Issue Life Insurance

  • Approved – regardless of health conditions
  • Maximum issue age 99 (Single-Pay)
  • 1, 3, 5, 7, & 10 year paid-up available
  • Death benefit increases daily
  • Simple growth – current max rate 3%
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How the IFET™ Works

Step One
Fund with “Countable” resources
Reposition money already set aside for funeral expenses into the guaranteed issue life insurance policy. Money may include checking, savings, CDs, money markets, annuities, cash value life insurance, investments, bonds, etc… These are typical assets your client may be forced to liquidate in order to qualify for financial assistance through Medicaid.

Step Two
Irrevocably assign policy ownership to the IFET
The IFET protects the policy from creditors while your client is alive and is also considered an “exempt” resource when applying for Medicaid.* The insurance death benefit continues to grow, earning tax free interest, until needed. Your client’s death certificate is the only key that will unlock the trust and release the benefits.

Step Three
Upon death, the trust will be unlocked
Within 48 hours of receipt of the insurance trust claim form, the trust will first pay any applicable funeral expense related items.  Any excess trust funds will be paid directly to your client’s Estate income tax free.**

The IFET™ is funded with a “Guaranteed Issue Life Insurance” policy that has an increasing death benefit to offset inflation. The maximum investment amount is $15,000.00, per insured.* Premium modes available are: single pay and one-year pay to age 99 and 3, 5, 7, & 10 year paid-up multi-pay plans for those who are unable to afford a lump sum payment. Upon application, the life insurance policy is irrevocably assigned to the trust. The trust protects the policy from creditors and continues to increase in value until death. Upon death, the trust will first and foremost pay any applicable funeral expense related items. Any excess funds will be paid directly to the Estate of the insured, income tax-free, and may be subject to state recovery. Funds transferred to the IFET™ are protected from a Medicaid spend-down upon the effective date of the transfer and are not considered a divestment.* Look to your client’s “countable” resources column for asset/s to reposition into the IFET™.

* Medicaid regulations and the IFET™ investment limitations may vary from state to state. Please contact a representative from FuneralExpenseTrust.com to obtain more information.
** May be subject to Medicaid state recovery if applicable.