When you prepay for a funeral in New Jersey, it is called a prepaid agreement. There are two kinds of prepaid agreements: revocable and irrevocable. The agreement type used is based solely on whether or not you are currently receiving (or expect to receive) Supplemental Security Income (SSI)/Medicaid or other means-based public assistance. Revocable and irrevocable agreements can both be funded using any of the permissible funding methods.
Revocable agreements are fully refundable, transferable and adjustable. This means once arrangements are made, you may request a refund and/or change the funeral home and the selected funeral services or merchandise at any time without penalty.
The New Jersey Prepaid Funeral Trust Fund (Funeral Planning CHOICES) Revocable Trust Agreement may be viewed here:
New Jersey law specifically limits irrevocable accounts to anyone who is receiving or seeking eligibility for SSI/Medicaid or another means-based public assistance program. Only individuals who currently receive assistance, or expect to apply for such benefits within six months, may establish irrevocable arrangements in order to spend down assets.
Irrevocable means that the funds used to prepay funeral arrangements are NOT REFUNDABLE and must be used for funeral and burial purposes. By law, irrevocable agreements cannot be cancelled or refunded; however, they are still transferable – meaning you may change the funeral home you’ve selected at any time.
The Funeral Planning CHOICES Irrevocable Trust Agreement for SSI/Medicaid and General Assistance prearrangements may be viewed here:
View a sample irrevocable agreement
The funds in your prepaid funeral account will be used to pay the funeral home for its services at the time of death. The distribution of any remaining funds after the funeral bill is paid is determined by the agreement type, account purchaser and funding method.
Excess funds from a revocable prepaid funeral account are payable to the estate of the deceased (if the deceased was the account purchaser); the account purchaser (if different from the deceased and still living); or the beneficiary (if the funding method was an insurance policy).
Because funds from irrevocable accounts can only be used to pay for funeral expenses, excess funds must be returned to the State of New Jersey. This provision was put in place to help reimburse New Jersey for a small portion of the money it spends each year on the SSI/Medicaid and General Assistance programs.