Elder Law FAX The May 7, 2007, issue of Elder Law FAX, a free newsletter published every other Monday by the Elder Law Practice of Timothy L. Takacs.   Prepaid Funeral Contracts Not for Everyone Individuals who are applying for Medicaid are sometimes given quick advice by others to purchase an  irrevocable funeral contract.   A prepaid funeral contract is a legal agreement which allows a person to pay now (with money or securities) for funeral services that will be needed sometime in the future. This contract may include the funeral, burial, cremation, other services and /or merchandise.   A prepaid funeral contract may be revocable or irrevocable. Irrevocable means the contract cannot be canceled, but may be transferred to another funeral home if chosen.   In the state of Tennessee, an irrevocable funeral contract is not counted as an asset for Medicaid purposes. A funeral trust could be set up instead, but only up to $6000.   A burial plot includes the purchase of a grave site, opening and closing of a grave site, cremation urn, casket, outer burial container and a headstone or marker. There is no limit on how much can be spent on a burial plot.   Before purchasing, you should follow this consumer checklist: Find out about the funeral home. Ask your family and friends for recommendations. Get a written statement of the prices and of the good and services you select. Make sure you really need all the services that are being offered. Ask the funeral director to explain the services and fees. Clarify whether the fees can be reduced if you do not need all the services. Be sure that any contract you sign clearly specifies the responsibilities of the funeral home. Ask the funeral director to describe the investment risk and rate of return of every option. Contact the escrow agents directly to ask about their management policies. When planning for long-term care, a prepaid funeral contract may or may not be a good approach, particularly if it involves a Special Needs Trust. In such cases, different rules may apply.