It is possible that, in your search for answers to questions regarding Medicaid, you may have seen the term Medicaid Funeral Trust come up at some point. But what exactly is a Medicaid Funeral 
Trust?
The Internal Revenue Service (IRS) defines a funeral trust simply as a fund of pooled income that is set up either via the funeral home or cemetery. The trust is funded by any property (normally cash, bonds, or life insurance) that a person transfers into it with the express purpose of covering both funeral and burial costs.
More often that not, the funeral trust is entered into directly with the funeral home itself, and the funeral home may potentially agree to lock in costs for any future funeral or burial services at a predetermined (and agreed upon) price.
The funeral home may also serve as trustee for the trust as well.
A funeral trust may be either revocable or irrevocable. An irrevocable trust cannot be dissolved until all terms of the trust have been met. With an irrevocable trust, this means that the creator of the trust must die before the terms and assets in the trust can go to work—thanks to wording in the trust that states that assets cannot be paid until death. However, it is important to note that an irrevocable funeral trust CANNOT be dissolved by any person or entity (not even the creator of the trust) for any reason whatsoever. Neither can anyone have access to any assets placed in the trust at any time.
Conversely, a revocable trust can be created by anyone and then dissolved by the creator at a later date. When the trust is dissolved, any remaining assets in the trust will then go back to the ownership status they had prior to being placed in the trust.
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