Washington Report 032003

Date Published: 
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Bill Encourages Preneed Planning

by Robert M. Fells, Esq., general counsel
Sen. Blanche Lincoln (D-AR) has introduced S. 166 to amend the Social Security Act by clarifying that the value of certain irrevocable funeral and burial arrangements are not to be considered available resources in order to obtain benefits under the Supplemental Security Income (SSI) program.
Lincoln explained the reasons behind her proposed legislation: "Irrevocable funeral trusts ... cannot be accessed until after the owner's death. Until recently, these trusts were not included in SSI resource calculations, but an administrative misinterpretation in 2001 dropped this important exclusion. This misinterpretation has since been corrected, but it had serious repercussions for many senior citizens while it was in effect. ... I am introducing this bill to codify the exclusion to give senior citizens certainty that future administrations will not be able to misinterpret Congressional intent."
The Social Security Act already excludes the value of burial spaces or agreements to purchase spaces. However, the recent administrative rulings referred to by Sen. Lincoln sought to disqualify prepaid funeral/burial goods and services as excludable resources.
During the introduction of S. 166 on January 15, Lincoln noted, "In the past, Congress has recognized the value of funeral planning as good social policy. We have encouraged consumers to engage in 'preneed' funeral planning in a number of ways. This legislation will encourage people to engage in preneed planning. It will codify the existing practice of excluding irrevocable funeral trusts from SSI calculations and ensure that future misinterpretations are avoided. We must ensure that people will not be penalized for providing for their own funerals."
The ICFA has contacted Sen. Lincoln's office and the Senate Finance Committee, where the bill was referred, to discuss the wording of the proposal. Although the bill's language clearly states that it excludes "certain funeral and burial arrangements" as resources, the proposed wording to amend the Social Security Act refers only to "funeral goods and services for a funeral." The ICFA is recommending further clarification by adding the term "burial" to the statutory reference to "goods and services."
At this time, no action on the bill has been announced.