SSR 76-9: SECTIONS 1613(a) (42 U.S.C. 1382b(a)) -- SUPPLEMENTAL SECURITY INCOME -- RESOURCES -- PREPAID BURIAL CONTRACTS -- MINNESOTA

20 CFR 416.1201(a)

SSR 76-9

Held, prepaid burial contracts are revocable in accordance with Minnesota State laws and must be treated as a countable resource in establishing eligibility to Supplemental Security Income.

The standard "Agreement for Pre-Paid Funeral used in Minnesota contains the following language:

"Pursuant to the laws of Minnesota, 1953, Chapter 481, the payments made under this contract shall remain intact as a trust fund until the obligation of this contract is fulfilled according to its terms, or until refunded to the person who made the payments (or payment) upon his demand."

Funds used to make payments for a burial trust containing the above language should be treated as resources of the depositor of the funds for the purpose of determining eligibility for SSI in Minnesota. This is because the agreement and the cited Statute, also contained at Minnesota Statutes Annotated §§ 149.11 - 149.14, allow a refund to be made to the person who made the payment or payments upon his demand, and are therefore revocable by the depositor of the funds.

Also for consideration were two agreements that were submitted on standard forms, however, these forms were modified in that they refer to the Funeral Director and purchaser rather than to the Trustee and Beneficiary. Moreover, the words "held in trust" have been inserted throughout one of the agreements and in the other agreement, reference is made to a Certificate of Deposit.

Although an evaluation of the two modified agreements would be less clear-cut than an evaluation of the standard agreement, the funds used to make payments under the modified agreements should also be treated as resources of the depositor of the funds for the purpose of determining eligibility for SSI benefits in Minnesota.

Generally, we look to State law to determine whether a particular arrangement is revocable or irrevocable, however, such laws are not dispositive of issues involving whether a person's property interest in a prepaid funeral arrangement is or is not an includable resource for purposes of determining eligibility for SSI benefits.

Notwithstanding the fact that the modified agreements made no reference to the laws of Minnesota, 1953, Chapter 481, also contained at Minnesota Statutes Annotated §§ 149.11 - 149.14, they are subject to the requirements of that law. Minnesota Statutes Annotated § 149.11 read as follows:

When prior to the death of any person, he or someone in his behalf, enters into any transaction, makes a contract, or any series of combination of transactions or contracts with another person, partnership, association or corporation, other than an insurance company licensed to do business in the State of Minnesota, for or related to the disposition of his body, by the terms of which, certain personal property will be delivered upon his death, or the professional services of a funeral director or embalmer will then be furnished, or both, then the total of all money so paid by the terms of such transaction, contract or series or combination of transactions or contracts shall be held in trust for the purpose for which it has been paid until the obligation of transactions or contracts is fulfilled according to its terms, or refunded to the person who made the payment or payments, upon his demand. Accruals of interest or dividends declared upon the sum of money so held in trust are subject to the same trust.

The above Statute clearly covers all prearranged funeral plans, whether they be styled as trust agreements, contracts, or other modes of transaction. The substance of the arrangements cause the requirements of the Statute to apply, rather than the form by which such arrangements are made. Whenever the substance of a contract is a funeral plan, the Statute directs that the funds paid are to be held in trust until the contract has been fulfilled or the money is refunded to the depositor of the funds upon his demand. We therefore conclude that the funeral plans created under the modified agreement forms are subject to the requirements of Minnesota Statutes Annotated § 14.11, and that revocable trusts are created thereunder.

Back to Table of Contents