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Forum Newbie
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Last Login: 8/5/2008 9:38:42 AM
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| My 83 year old mother was recently advised to "get rid of" her $10,000 life insurance policy.This would apparantly be taken from her in the event she would need to be placed in a nursing home. I can't imagine this policy has much of a cash value. I am new to all of this and I have never heard of such a thing! How can the home take this money and who would pay for her funeral expenses? What is a funeral trust?
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Forum Member
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Last Login: 6/23/2008 1:27:21 PM
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| The cash surrender value (CSV) of a life insurance policy represents countable resources for Medicaid eligibility determinations. Therefore, the CSV alone of your mother's policy could keep her off of Medicaid. Medicaid will never "take" the policy--they will simply count the CSV and that could force your mother to get rid of the policy if she wanted to qualify for Medicaid. One option is to cash in the policy and use the surrender value as you would her other funds by spending down to the Medicaid resources limit. And Medicaid policy can sometimes vary from state to state but here in KY, if your mother did not have other complete funeral arrangements it would be permissible for her to irrevocably assign ownership of the policy to a funeral home and then Medicaid would not have any CSV to count against her. Joe Whitehouse, Medicaid Consultant, Louisville, KY.
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Forum Newbie
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Last Login: 8/5/2008 9:38:42 AM
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| We have just found out that the CSV of the policy is $10,000. Is the best thing to do sign it over to the funeral home as a funeral trust? Would they then keep the entire amount?
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Forum Member
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Last Login: 6/23/2008 1:27:21 PM
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| You will have to decide if signing over the policy is the best thing to do, or not. I can tell you that signing over the policy is probably the easiest thing to do--assuming your state allows that in their Medicaid program. And yes, if you sign over the policy the entire amount will be tied up until after the funeral is provided--anything left over should go to your mom's estate. Most prepaid funerals that I see here in KY are in the $6,000-$8,500 range. If your mom has other needs (clothing, personal items, etc.) you could simply cash in the policy, pay the funeral home for the arrangements and probably have some money left to get her some other things. I hope this helps. Joe Whitehouse, Medicaid Consultant, Louisville, KY.
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Forum Newbie
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Last Login: 8/5/2008 9:38:42 AM
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| Thank You!!! When I first heard this, I couldn't even believe it was legal! This is all new and very confusing. I am very glad I found this web-site!
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Forum Newbie
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Last Login: 9/16/2008 8:43:15 PM
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Nice post about the LIC policy....
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simmons
SuperBabyGuide
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