1030.015.00  CASH AND SECURITIES AS AN AVAILABLE RESOURCE

Refer to Section 1025.000.00 for what is included as Cash and Securities.

1030.020.00  LIFE INSURANCE, PREPAID BURIALS AND BURIAL FUNDS

1030.020.05  LIFE INSURANCE

An individual (if married, exemption applies for each person) is allowed an exemption of $1,500 on the cash surrender value (CSV) of a burial contract or life insurance, or on a combination of both.  See the policy covering Cash Surrender Value Exemption.

If the value of life insurance policies for the applicant or the applicant's spouse, on which other persons are paying premiums, might affect the applicant's eligibility, determine how long the arrangement has been in effect, the amount paid out in premiums for the applicant, and whether a release of the policy has been executed.  The assets in a life insurance policy belong to the insured person unless the insured has signed a release to the person paying the premiums and has registered this release with the insurance company.

However, an exception is made when premiums have been paid by relatives since the date of issuance: The policy is considered to belong to the relative(s) paying the premiums and does not affect eligibility.  If the claimant has paid the premiums for part of the time the policy has been in effect, determine the claimant's equity by computing the claimant's proportionate share based on present cash surrender value.

EXAMPLE:  A claimant has a policy that has been in effect for 20 years and the present cash surrender value is $800.  A daughter paid the premiums for the first five years of the policy life, the claimant's equity is considered to be 15-twentieths or three-fourths of the CSV, or $600.

Discuss with the applicant the possibilities of assets in lapsed life insurance policies the applicant may have.  Even though the policies themselves have been lost, it is sometimes possible to determine their value if the applicant can provide some information by which the policies may be traced by the insurance company.

1030.020.10  BURIAL CONTRACTS

Pre-paid Burial Agreements are considered as available resources based on the type of agreement.  Types of agreements are:

1. Agreements Prior to October 13, 1965.
2. Agreements On or After October 13, 1965.
3. Irrevocable Pre-Need Contract.

1030.020.10.05  AGREEMENTS PRIOR TO OCTOBER 13, 1965

The amount of money which a claimant deposited or expended prior to October 13, 1965 as advance payment for funeral or burial services is considered in the same manner as the cash surrender value of life insurance without regard as to permanency of the arrangement, and the claimant is considered as owning 100 percent of such funds. For example, if a single claimant has deposited $2,700 with an undertaker for the purpose of paying for his/her burial expenses, and applies on April 1, 2017, she/he is ineligible for assistance on the basis of having an available resource in excess of the resource limits at the time of application.

1030.020.10.10  AGREEMENTS ON OR AFTER OCTOBER 13, 1965

Section 436.010 - 436.080, Laws of Missouri, 1965, established a new section in the Missouri laws “relating to the sale of personal property or services under prearranged funeral agreements, contracts or plans, regulating the disposition of and handling of monies paid thereunder and providing penalties for the violation thereof”.

Subsection 1 of the law provides that any agreement, contract, or plan for pre-paid funeral or burial services “is hereby declared against public policy and void, unless all money paid thereunder is handled in accordance with the provisions of this act and subject to the terms of a written agreement not in conflict therewith”.  The law defines the term “funeral merchandise” and specifies some of the contents of such a written agreement which must be present if the contract is a valid one; if it is dated on or after October 13, 1965.

In order to determine the equity which a claimant has in money which she/he has paid to or deposited as an advance payment for such a contract which is dated on or after October 13, 1965, it will be necessary to verify (a) the amount of money which has been paid for this purpose; and (b) the type of contract purchased from any person or company selling such services, whether on a paid-in-full or time-payment basis.

The law established three types of funeral or burial contracts which may be sold, and sets forth certain conditions which must be met for each one to be a valid contract.  The following is a brief statement of the major points to look for in determining which type of contract is being used.

1. If the agreement provides that all payments are to be deposited in a joint account under the joint names and joint control of the purchaser and seller, then the purchaser may request withdrawal of the funds held in the joint account at any time.  When such request is made, the seller must cooperate in making the joint withdrawal, but the purchaser will receive only ninety percent of the amount paid in while the seller will retain the other ten percent.
2. If the agreement allows the seller to deposit all payments received, over and above an amount equaling twenty percent of the total amount agreed to be paid, in an account in the name of the seller as trustee, then the purchaser may request cancellation of this contract prior to maturity but will receive only the amount she/he has actually paid over and above twenty percent of the total amount for which the contract was written.
3. If the agreement allows the seller to retain as his/her own money all the funds collected until she/he has received twenty percent (20%) of the total amount agreed to be paid, then all additional payments must be deposited by the seller in the trust department of a state or national bank which has trust powers to be held for the use and benefits of the purchaser.  This account must be carried in a trust fund in the name of the seller, but the bank becomes the trustee with power to invest the funds.  The purchaser may request cancellation of this contract prior to maturity but will receive only the amount(s) she/he has actually paid over and above the twenty percent (20%) of the total for which the contract was written.

The claimant's equity under any of the three types of contract noted above is the total of all payments minus the amount to which the seller is entitled upon cancellation.  Any interest earned by such deposited funds belongs to the seller.

1030.020.10.15  IRREVOCABLE PRE-NEED CONTRACT

Sections 436.010 - 436.080 RSMo were amended effective August 13, 1982, to allow a claimant to set aside money in an irrevocable funeral/burial contract.  The law provides that “.if a purchaser is eligible, becomes eligible or desires to become eligible to receive public assistance under Chapter 208 RSMo, or any other applicable state or federal law, the purchaser may irrevocably waive and renounce his right to cancel such agreement.  The waiver and renunciation must be made in writing.”.

Section 436.007 provides that “Each pre-need contract made before August 13, 1982, and all payments and disbursements under such contract shall continue to be governed by sections 436.010 - 436.080 RSMo, as these sections appear in RSMo 1978; but, the provisions of subsection 2 of section 436.035 (election of irrevocability) may be applied to all pre-need contracts which are executory on August 13, 1982.

This section of the law allows an applicant or recipient of public assistance to change a previously signed revocable agreement into an irrevocable agreement.  Do not consider this change as a transfer of property because it is assumed that fair and valuable consideration will be received upon the person's death.

NOTE:  Section 436.035 RSMo provides for a thirty (30) day “cool down” period when a claimant is initially creating an irrevocable pre-need contract or making an existing contract irrevocable.  This provision allows the claimant to withdraw from the contract within thirty (30) days from signing and receive a full refund of all payments.

The following options are available to the claimant:

1. A claimant may set up an irrevocable pre-burial contract in any amount.  The amount of the irrevocable agreement is not an available resource.  The $1500 cash surrender value exemption is applied against the amount of the irrevocable agreement. Refer to the policy regarding Cash Surrender Value Exemption.
2. Any pre-need contract in effect on August 13, 1982, may be declared irrevocable.  The claimant must sign an agreement with the seller that relinquishes the revocability of the contract.  Once the contract is made irrevocable, the claimant may never regain control of this money.
3. The decision to enter into a pre-need contract belongs solely to the claimant.  Answer eligibility questions concerning available resources, but never advise the claimant how to dispose of monies.  These actions must be left to the claimant and the claimant's family.

1030.020.10.20  ASSIGNING LIFE INSURANCE TO BURIAL FUND CONTRACTS

When a life insurance policy is irrevocably assigned to partially or totally fund a revocable or irrevocable pre-need burial contract, do NOT consider the CSV an available resource.

A life insurance policy is irrevocably assigned when the following conditions are met:

1. There is a valid pre-need burial contract; AND
2. There is:
   1. verification from the funeral home that documents funding of the contract was made by the irrevocable assignment of the claimant's life insurance policy; OR
   2. an agreement with the insurance company that either transfers the ownership of the policy to the funeral home OR names the funeral home as the irrevocable beneficiary of the policy.

If the conditions are met, exclude the CSV from consideration as an available resource as of the month the claimant signs the documents to fund the pre-need burial contract with the life insurance policy.

If the life insurance policy does not meet the above criteria, consider the CSV an available resource.  Refer to the policy covering Cash Surrender Value Exemption.

1030.020.15  DESIGNATED BURIAL FUNDS

If a claimant has no pre-need burial or life insurance contract or the amount(s) of the pre-need burial contract(s) and life insurance is less than the maximum cash surrender value exemption, the claimant may designate funds to be set aside for burial. An individual may designate more than the maximum exemption amount as funds set aside for burial; however, no more than the cash surrender value exemption amount (less the amount(s) excluded for pre-need burial plans) and life insurance may be excluded as an available resource.

EXAMPLE:  Mr. Allen claims a $1000.00 savings account is set aside for burial. He signs the Burial Fund Resource Designation form. The caseworker verifies Mr. Allen has a life insurance policy with a CSV of $1200.00. The life insurance CSV of $1200.00 is excluded as an available resource. Therefore, only $300.00 of the savings account may be excluded as funds set aside for burial. ($1500.00 face CSV exemption less $1200.00 CSV of life insurance equals $300.00). The remaining $700.00 in the savings account is considered an available resource.

Designated burial funds are usually liquid assets, but any real or personal property may be designated as a burial fund; however, the fund must still be held separately. For example, an individual could not designate one half of a lot as a burial fund because the lot cannot be identified separately. The individual could designate the entire lot as set aside for burial; however, consider any amount above the CSV exemption as an available resource.

Once a burial fund is so designated by the claimant's signature on the Burial Fund Resource Designation form, all interest or appreciation to the exempted portion of the fund is not considered an available resource from the date the claimant becomes eligible for assistance.

Funds designated as set aside for burial must be separately identifiable and not co-mingled with other funds. For example, funds designated for burial cannot be included in a checking account that is used for other purposes. If the claimant wishes to make such a designation, obtain the claimant's signature on the Burial Fund Resource Designation form. DO NOT EXEMPT FUNDS SET ASIDE FOR BURIAL WITHOUT OBTAINING THE CLAIMANT'S SIGNATURE ON THE BURIAL FUND RESOURCE DESIGNATION FORM (IM-99).

1030.020.20  CASH SURRENDER VALUE (CSV) EXEMPTION

An individual is allowed an exemption of $1,500 on the cash surrender value of life insurance, burial contracts, designated burial funds, or a combination of these.  (If married, the exemption applies to each person.)  Follow these policies when applying the exemption:

1. Use the cash surrender value of a life insurance policy when applying the $1500 exemption.
2. The cash surrender value of a revocable burial contract is the refundable portion of the amount paid into the contract to date.  Apply the $1500 exemption only to the refundable portion.
3. The cash surrender value of a burial fund is the claimant's equity in the asset, less any excluded interest or appreciation that has accrued to the designated resource.
4. Always apply the cash surrender value exemption in this order:
   1. First, to irrevocable pre-need burial contracts.
   2. Second, to revocable burial contracts funded by the irrevocable assignment of life insurance.
   3. Third to either the CSV of life insurance that is not irrevocably assigned to fund burial contracts or to revocable burial contracts.
   4. Fourth and finally, to designated burial funds.

   NOTE:  If the amount paid into an irrevocable contract or a contract funded by the irrevocable assignment of life insurance exceeds the CSV exemption, do not consider the additional amount of the contract an available resource. Furthermore, no exemption remains to be counted toward other contracts or policies.

   EXAMPLE:  Mrs. Stitch owns three (3) life insurance policies with face values of $1000.00 each.  The CSV of each policy is $800.00. She purchases a $2000.00 irrevocable pre-need burial contract and irrevocably assigns two (2) of the insurance policies to fund the contract.  Because the irrevocable pre-need burial contract exceeds $1500.00, consider all the CSV from the remaining unassigned life insurance policy ($800.00) as an available resource.

5. To apply the cash surrender value exemption, determine the CSV from the Insurance and Prepaid Burial Letter and/or the amount the claimant may recover from a revocable contract.  To determine the amount of CSV that is an available resource, use the following formula:

   CSV - exemption = the nonexempt amount

   EXAMPLE:  Mrs. May owns a life insurance policy with a face value of $10,000.  The cash surrender value of the policy is verified at $1775.  $1775 - $1500 = $275 available CSV.

   For a revocable contract, the CSV is the recoverable amount according to the terms of the contract.

   EXAMPLE:  Mr. Uld has a $2000 fully paid revocable prepaid burial plan.  The plan is an 80%-20% plan.  The CSV of the plan is $1600 ($2000 x 80%).  Apply the $1500 exemption to the CSV:  $1600 - $1500 = $100 available CSV.

6. In spouse cases, apply the exemption to each individual's contracts policies separately.  Add together the countable CSV of each and compare to the appropriate resource maximum.  Consider the amount(s) of countable CSV for a division of assets determination where appropriate.  Refer to the policy covering Division of Assets.

   EXAMPLE:  Neither the claimant nor spouse has any cash or securities.  The non-vendor claimant has an insurance policy with a cash value of $1200 above the $1500 exemption and the claimant's spouse has an insurance policy with a cash value of $400 above the $1500 exemption. The case is eligible based on available resources because the total CSV of $1600.00 is less than the appropriate resource maximum for couples.

1030.025.00  PERSONAL PROPERTY AS AN AVAILABLE RESOURCE

Personal property or assets is defined as household goods, jewelry, farm surpluses, livestock, farm or business machinery or equipment, automobiles and trucks, and similar items. Personal property may be considered an available resource or may be excluded from available resources. Personal Property is entered in FAMIS as Resource Class PP on the Select Financial Resource (SELFRES/FMWB) screen.

Consider the following items available resources:

• Boats, campers, trailers, and recreational vehicles not used as the applicant/participant's homestead. Enter on the Personal Property screen FMW2 using one of the following codes in the Type field:
  • BO BOAT\MOTOR
  • CP CAMPER\TRAILER
  • TL TRAILER (UTILITY\BOAT\ETC)
  • MH MOTOR HOME
• Motorcycles, unless only one is owned and it is the applicant/participant's only vehicle. Enter in FAMIS as Class VE VEHICLE and Type MC  MOTORCYCLE.
• Furniture not directly used by the applicant/participant (in storage or in another person's household). Enter in FAMIS as Class PP Personal Property, and Type HH HOUSEHOLD FURNISHINGS.
• Farm and business machinery or equipment if no longer used in the regular course of business or employment. Enter in FAMIS as Class PP Personal Property and Type FM FARM MACHINERY or BE BUSINESS EQUIPMENT OR TOOLS.

Exclude the following items from available resources:

• One automobile, truck, or motorcycle if it is the only vehicle owned. Enter in FAMIS as Class VE VEHICLE MHABD Excl Rsn FE ONE VEHICLE PER FAMILY EXEMPTION. If more than one such vehicle is owned, exercise personal judgment based on individual family needs to determine whether the additional vehicle(s) is an available resource.
• Household furnishings being used by the applicant/participant regardless of their value. Consider household furnishings left in the applicant/participant's unoccupied home as an available resource at the time the home is counted as an available resource. Refer to Income Maintenance manual section 1030.010.10 REAL PROPERTY AS AVAILABLE RESOURCE. Enter in FAMIS as Class PP Personal Property, and Type HH HOUSEHOLD FURNISHINGS MHABD Excl Rsn HF HOUSEHOLD FURNISHINGS.
• Wedding and/or engagement ring, and watches owned by the applicant/participant or spouse. Enter in FAMIS as Class PP Personal Property, and Type JE JEWELRY MHABD Excl Rsn WE WED/ENGAGE RINGS AND WATCHES.
• A mobile home in which the applicant/participant or spouse has lived is counted the same as real property when considering available resources. This provision applies regardless of whether the mobile home can be moved or who owns the land on which it is located. When two mobile homes are joined to form one housing unit, consider them as one property for purposes of determining eligibility based on available resources.
• Farm surplus, livestock, machinery, equipment, tools, and similar items used in the course of business or employment. Enter in FAMIS as Class PP Personal Property and Type FM FARM MACHINERY or BE BUSINESS EQUIPMENT OR TOOLS and MAHBD Excl Rsn IP INCOME PRODUCING.
• The value of burial plots is exempt from consideration as an available resource, whether their intended use is for an applicant/participant, immediate family member, or someone else. Enter in FAMIS as Class PP Personal Property, and Type BP BURIAL PLOT MHABD Excl Rsn BR FUTURE BURIAL.