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Long-Term Care Planning Funeral trusts funded by a Medicaid applicant for her adult children and their spouses are exempt from the transfer of asset rules. Indiana Family and Social Services Administration v. Culley (Ind. Ct. App., No. 49A02-0110-CV-670, June 11, 2002).Three months after moving to a nursing home, Irene Culley used some of her money to purchase four life insurance policies. The policies were then irrevocably assigned to a funeral home and four funeral trusts were created to benefit Mrs. Culley's adult son and daughter and their spouses. Two days later Mrs. Culley applied for Medicaid. The Family and Social Services Administration (FSSA) approved Mrs. Culley's application but imposed a transfer penalty of seven months on the ground that the purchase of the funeral trusts was an effort to hasten her eligibility for Medicaid. The trial court reversed and ordered the FSSA to reimburse Mrs. Culley for the benefits she had been denied. The FSSA appealed, contending that the transfers were ineligible because Mrs. Culley had transferred cash to the children, who then purchased the burial trusts for themselves. The FSSA also argued that the trial court erred in ordering affirmative relief rather than remanding the case to the agency for further proceedings. The Court of Appeals of Indiana affirms the trial court's determination that Mrs. Culley was not subject to the transfer penalty and remands to the FSSA. The court first notes that that the burial space resource exemption applies not only to a burial space for the beneficiary or applicant, but also to any member of his or her immediate family. The court then finds no evidence supporting the SSA's premise that the transfer was one of cash from Mrs. Culley to her children. While ruling that the trial court had the authority to order affirmative relief, the court remands to the FSSA for a determination as to how the funds formerly subject to the transfer penalty should be distributed.
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