Expenses included for burial funds exclusion purposes are generally those related to preparing a body for burial and any services prior to burial. They usually include such things as transportation of the body, embalming, cremation, flowers, clothing, and services of the funeral director and staff.

Usually, expenses for items used for interment of the deceased's remains are not included for burial funds exclusion purposes. Such items may be subject to the burial space exclusion, per SI 01130.400. However, items that do not qualify for the burial space exclusion, e.g., a space being purchased by installment contract, may be excluded under the burial funds exclusion.

We can exclude up to $1,500 each in funds set aside for:

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  the burial expenses of the individual; and

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  the burial expenses of the individual's spouse (eligible or ineligible).

This exclusion is separate from and in addition to the burial space exclusion. However, the $1,500 burial funds exclusion may also include the value of funds paid on installment contracts for burial spaces not qualifying for the burial space exclusion.

The maximum $1,500 that can be excluded is reduced by:

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  the face value of any life insurance policy on the individual (or spouse, if applicable), if such policy is excluded per SI 01130.300; and

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  any amount held in an irrevocable trust, burial contract, or other irrevocable arrangement for the individual's (or spouse's) burial expenses except to the extent that it represents excludable burial spaces.

EXAMPLE:

A recipient has the following burial resources:

Treatment - We exclude the $1,000 savings account. Two years later, the recipient wants to add to their designated burial savings account which now has a balance of $1,150 due to accumulated interest. They can increase the excluded funds in the account by up to $300 which would bring the total designated burial funds up to $1,300 (1,500 - 200) plus interest.

Note that when determining the amount still available for exclusion, we disregard the amount of interest which accumulated in the account.

A subsequent purchase of an excluded life insurance policy or an irrevocable burial contract reduces the amount of the available burial funds exclusion as described in SI 01130.410C.1.b. in this section. The reduction is effective the month after the month in which the life insurance or the irrevocable burial contract was purchased. This may also result in a different ratio of excluded to non-excluded funds. For information on calculating the ratio, see SI 00830.501.

Burial insurance policies are not life insurance policies. For a definition of burial insurance, see SI 01130.300B.4. For SSI purposes, burial insurance is an irrevocable arrangement that reduces the $1,500 burial funds exclusion by the policy's face value.

Any appreciation in the value of excluded burial funds is excluded from resources (and from income), even if the total of the burial funds thus excluded exceeds $1,500. This includes:

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  Interest earned by burial funds, provided the interest is left to accumulate as part of the funds; and

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  Growth in the excluded portion of the cash surrender value (CSV) of a life insurance policy that has been set aside using the burial funds exclusion.

NOTE: We apply the $1,500 burial funds exclusion to the life insurance policy’s CSV at the time the policy is set aside for burial. The CSV of a life insurance policy will increase over time for three reasons: payment of premiums by the policyholder, return on the investment and the business condition of the life insurance company, and the age of the policy. However, because insurance companies cannot provide a breakout of each of these three factors, the increases in the excluded portion of the CSV are also excluded from resources, regardless of the reason for the growth.

Once the amount of designated burial funds equals $1,500 (or other maximum established per SI 01130.410C.1.b. in this section), the only additions to that amount that can be excluded under the burial funds provision are appreciation, interest, and growth in the excluded portion of the CSV of a life insurance policy that has been set aside for burial, per SI 01130.410C.1.e. in this section.

NOTE: If the CSV of a life insurance policy is more than $1,500 at the time the policy is set aside for burial, growth of the non-excluded portion of the CSV is countable. For an example, see SI 01130.410C.5.f in this section. For calculating the prorated appreciation on commingled burial funds, see SI 00830.501C.3.

Until $1,500 (or such other maximum that is established in SI 01130.410C.1.b. in this section) in burial funds has been designated, additional amounts can be excluded under the burial funds provision if the individual designates them for burial expenses. Interest on excluded burial funds is not included in determining if the $1,500 maximum has been reached.

Once a fund is designated, it remains a burial fund until:

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  eligibility terminates; or

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  the individual uses the funds for another purpose, in which case a penalty may apply per SI 01130.410C.5.c. in this section.

Recipients eligible prior to 8/1/90 who have excluded burial funds that do not meet the definition in SI 01130.410B.1. in this section or the requirement in SI 01130.410C.3. in this section, must convert or separate their burial funds to meet the definition and requirement.

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  For personal contact redeterminations, recipients must convert or separate funds before the first of the month that is two months following initiation of the first personal contact field office-initiated redetermination on or after 8/1/90. For more information on the initiation date for FO redeterminations, see SI 02305.034A.3. For example, if the redetermination was initiated on September 15, the funds must be separated or converted before November 1.

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  For mailout redeterminations, if burial funds are developed, conversion or separation must occur before the first of the month that is two months following notification by the FO of the requirement to do so.

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  Failure to convert or separate funds before the required time will result in the loss of the burial funds exclusion until the required action is completed. In the example above, the exclusion would end October 31.

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  Individuals who lose the exclusion because they failed to take the required action within the proper timeframe should be offered conditional benefits if the provision applies. For more information on conditional benefits, see SI 01150.200.

There are exceptions to the burial funds separation or conversion requirement.

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  Recipients who have excluded burial funds prior to 8/1/90 and whose burial funds do not meet the definition in SI 01130.410B.1. in this section, or whose burial funds are commingled with non-burial-related assets, are not required to convert or separate their burial funds if there is an impediment to the conversion or separation.

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  If burial funds would not normally be developed, e.g., a redetermination using Form SSA-8202, no special development related to conversion or separation is required unless there is a discrepancy that must be resolved. For more information on completing redeterminations, see SI 02305.071. Information not elicited or alleged on forms completed during the redetermination, when compared to the SSR or prior files, does not constitute a discrepancy. If there is no discrepancy, the issue generally does not have to be developed unless the information indicates a question of eligibility, per SI 02305.072.

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  An impediment is a circumstance beyond the individual's control, which makes conversion or separation impossible or impracticable. Impediments can include provisions of law, regulations, or the action or inaction of other individuals over whom the recipient has no control. Inconvenience or mere unwillingness to convert or separate the funds is not an impediment.

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  For so long as the impediment exists, the burial funds will be excluded, provided that the individual remains otherwise continuously eligible for the exclusion.

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  When an impediment ceases to exist, the individual must convert or separate the burial funds before the first of the month that is two months following the month in which the impediment is removed. For example, if the impediment is removed in June, the change must be made before August 1.

A recipient has a 4-acre tract of land of which 1 acre is designated as a burial fund. At their redetermination on 12/3/90, the technician informs them that they must convert the land to a burial fund that meets our current definition. The recipient explains that a local zoning ordinance prevents them from subdividing their land and selling just 1 acre.

Since there is an impediment to the conversion of the land designated for burial, we can continue to exclude the property as a burial fund. If the impediment is removed (i.e., the recipient is granted a zoning exception permitting them to sell just the 1 acre), the recipient must convert the burial fund by the first of the month that is 2 months following the month in which the impediment is removed.

A recipient owns a second car. The current market value is less than $1,500 and the car is excluded as a burial fund. At a redetermination on 11/23/90, the technician informs the recipient that the car can no longer be excluded as a burial fund, but may be sold and that the cash received can be excluded as a burial fund. The recipient informs the technician that their children use the car to go to school and that they do not intend to convert the car to cash. Effective with the 1/1/91 resource determination, the second car becomes a countable resource.

With the exception noted in SI 01130.410C.5.b. in this section, if an individual uses excluded burial funds for a purpose other than the burial arrangements of the individual or the individual's spouse for whom the funds were set aside, the amount used will be withheld from future SSI benefits. This is a penalty, not the recoupment of an overpayment, and is not subject to overpayment procedures (e.g., waiver).

No penalty applies if, as of the first day of the month in which the excluded funds were used for another purpose, the individual's resources would not have exceeded the limit even if the burial funds were not excluded.

Transferring excluded burial funds from one form to another (e.g., from a certificate of deposit to a burial contract) is not use for another purpose.

Only actions (i.e., use for another purpose) by the individual who designated the excluded burial funds or by someone acting as that individual's agent result in a penalty. Actions by a joint owner of a financial instrument who is not the individual or agent (e.g., a joint owner of a designated bank account who withdraws funds for their own use) do not result in a penalty.

A loan against the cash surrender value (CSV) of a life insurance policy that has been designated for burial expenses is not use for another purpose if the loan is for the purchase of another burial fund.

Use of a burial fund as collateral for a loan is use for another purpose because the loan creates an encumbrance on the funds. Since the funds are not available for the individual's burial as long as they are encumbered, the funds cannot be considered set aside for the individual's burial. This is true even if the loan is used for burial purposes.

If burial funds are used for another purpose, consider that they were used in the following order: non-excluded interest, non-excluded originally designated amounts, excluded interest, and then excluded originally designated amounts. The penalty only applies to the use of excluded funds (including excluded interest).

NOTE: This is important in determining if a redesignation is necessary. To determine if redesignation is necessary, see SI 01130.410D.6.a. in this section.

EXAMPLE - Ms. Marquez designated $2,000 as a burial fund. We excluded $1,500 and counted $500. The account grew to $2,200 as of April 2018 ($1,650 excluded and $550 non-excluded; for information on prorating interest on commingled burial funds, see SI 00830.501) because of accumulated interest. Ms. Marquez used $750 for a non-burial purpose in April 2018. The technician determined that the $750 used consisted of $550 in non-excluded funds, all $150 of excluded interest and $50 of originally designated excluded burial funds. A penalty of $200 applies ($150 of excluded interest and $50 of originally designated excluded funds). Redesignation of the amount of burial funds is also necessary, per SI 01130.410D.6. in this section.

If burial funds are used for another purpose, a redesignation of the remaining funds may be necessary, per SI 01130.410D.6 in this section.

If burial funds are used for another purpose, a redesignation of the funds may be necessary. Redesignation does not mean that the burial funds exclusion is lost and reapplied, but that the dollar amount in the original designation must be changed or corrected. Redesignation becomes necessary at the point that there is a change in the amount of funds originally designated (not including accumulated interest or appreciation).

To calculate the amount of excluded interest, it is necessary to note in the file (e.g., in the File Documentation Notes section of the SSI claim system page) the allocation of excluded and non-excluded funds when the ratio of those funds changes from the ratio established in the prior designation. A new SSA-4169 - Burial Resource Statement is not required. For more information on the SSA-4169, see SI 01130.414.

In the situation where the misuse of funds causes the remaining burial funds (exclusive of interest or appreciation) to fall below the amount originally designated, a penalty may apply and the funds must be redesignated. Failure to correct the designation may lead to confusion on the part of the recipient as to how much SSA is excluding as a burial fund and may lead to incorrect determinations on the part of SSA personnel.

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  An individual originally designated $1,500 as a burial fund. Interest accumulated and the account grew to $1,750 in November 2018. In November, the individual withdrew $500 to repair their car. A $500 penalty applies (if other resources plus the $1,750 burial fund exceeded $2,000 as of the first of November). In addition, the individual must redesignate the amount of funds for burial because the amount in the account ($1,250) is now below the originally designated amount of $1,500 and the designation no longer reflects this amount. (Redesignation is not required for accumulated interest or appreciation as these are not “designated” amounts.)

  Alternatively, the individual may add $250 to the account and the original designation will be accurate. (However, any penalty still applies.) The individual can replenish the funds in excess of $1,500, but we will exclude no more than $1,500.

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  An individual designated $2,000 as a burial fund. We excluded $1,500 and counted $500 as a resource. The fund increased in value to $2,200 due to accumulated interest ($1,650 excluded and $550 non-excluded) in May 2018. The individual spent $250 in May for a non-burial purpose. No penalty applies since we assume the $250 was spent from non-excluded funds, per SI 01130.410C.5.f. in this section, which are now reduced to $300 ($550 - $250). However, the individual spent $200 in originally designated non-excluded funds, so a new designation must be taken for the remaining $1,800 of designated funds. (Redesignation is not required for accumulated interest or appreciation as these are not “designated” amounts.) Since no excluded funds were used, the excluded amount remains at $1,650 ($1,500 originally designated plus $150 of accumulated interest).

  The file should be annotated to show the amount of interest in the fund not designated ($150 of excluded interest) and to reflect the new ratio of excluded funds ($1,650 or 84.615%) to non-excluded funds ($300 or 15.385%) for proration of interest.

If the use of burial funds does not cause the amount of remaining designated burial funds (exclusive of interest or appreciation) to fall below the amount of funds originally designated for burial, then no redesignation of funds is necessary. The burial funds will be the amount originally designated plus any remaining accumulated appreciation or interest. However, changed amounts of excluded or non-excluded interest should be noted in the file.

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  An individual originally designated $1,500 for burial, and as of June 2018 the excluded funds totaled $1,850 because of accumulated interest. During June, the individual used $250 for another purpose. A $250 penalty applies (if other resources plus the $1,850 burial funds exceeded $2,000 as of the first of the month) and the remaining excluded burial funds will be $1,600 ($1,500 plus $100 interest) as of July. No redesignation is necessary as the individual did not misuse any of the $1,500 originally designated. However, the file should be annotated with the new amount of excluded interest.

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  An individual designated $2,000 as a burial fund (we excluded $1,500 and counted $500), and as of May 2018 the funds total $2,400 because of accumulated interest. Prorating the interest results in $1,800 in excluded funds and $600 in non-excluded funds. For instructions on prorating interest on burial funds, see SI 00830.501. The individual uses $100 for another purpose in May. Following the instructions in SI 01130.410C.5.f. in this section, the $100 is deducted from the non-excluded interest first, and no penalty applies. No redesignation is necessary because the individual did not misuse any of the originally designated amount. However, the file should be annotated to note that interest payments will no longer be prorated in the ratio of 75 percent excluded and 25 percent non-excluded, but 78.261 percent excluded and 21.739 percent non-excluded.

As an alternative to redesignation, the individual may add money to the burial funds to bring the total up to the originally designated amount, but excluded funds cannot be replenished in excess of $1,500 (exclusive of previously excluded interest) or a lesser amount if the exclusion is reduced by the face value of excluded life insurance or by an irrevocable burial arrangement. For instructions on reductions in the burial funds exclusion, see SI 01130.410C.1.b. in this section. Even if redesignation is not required, it is necessary to annotate the file if the ratio of excluded to non-excluded funds changes. Replenishment will not prevent application of a penalty, should one apply. For information regarding increasing the amount of excluded burial funds, see SI 01130.410C.1. and SI 01130.410C.2. in this section.

Explain the penalty that may apply if excluded burial funds are used for another purpose, per SI 01130.410C.5. in this section.

Always obtain the individual's statement on an SSA-4169 - Burial Resource Statement, or other signed form that includes all information on the SSA-4169, indicating their understanding of the penalty. For more information on the SSA-4169, see SI 01130.414.

If the SSR shows excluded burial funds, verify the current amount unless the tolerance in SI 01140.010B.2. applies. Remember that increases due to appreciation or accumulated interest are excludable even if they cause the total burial funds exclusion to exceed $1,500. If the funds have decreased, see SI 01130.410G. in this section.

Also, inquire whether designated burial funds continue to meet the definition of burial funds in SI 01130.410B.1. in this section and are being maintained separately from non-burial-related assets, per SI 01130.410C.3. in this section.

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  If funds do meet the above requirements, no documentation is necessary. However, inform or remind the individual of the requirements for maintaining the burial funds exclusion.

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  If funds do not meet the above requirements, document the changes that are required and see SI 01130.410F.1.b. or SI 01130.410F.1.c. in this section, as applicable.

If this is the first field office-initiated redetermination on or after 8/1/90, and the funds do not meet the definition of a burial fund or are commingled with non-burial-related assets, take the following steps:

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  Tell the individual that they must convert the funds to meet the current definition or separate them from all other non-burial-related assets before the first of the month after the next month. Advise the individual of the current amount of the burial fund (as determined above) that should be separated.

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  If the individual protests the need to convert or separate, tell the individual that they can present evidence of why the funds cannot be converted or separated. Document the file if the individual provides evidence that meets the exception in SI 01130.410C.4.b in this section.

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  If no impediment to conversion or separation applies, diary the case to follow-up with the recipient in the month that is two months after the initiation of the redetermination. If the necessary conversion or separation has not occurred by the required time, terminate the burial funds exclusion effective with the first of the month that is two months following the month of the initiation of the redetermination and inform the individual what steps they can take to reestablish the exclusion. Offer conditional benefits if appropriate. For more information about conditional benefits, see SI 01150.200.

The diary date above applies to personal contact redeterminations. For the diary date for other types of redeterminations, see SI 01130.410C.4. in this section.

If this is not the first field office initiated redetermination on or after 8/1/90, take the following steps:

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  Terminate the burial funds exclusion effective with the first of the month following the month in which the burial funds fail to meet either the conversion or the separation requirement.

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  Tell the individual why the exclusion no longer applies and what steps they can take to reestablish the exclusion. Offer conditional benefits if appropriate. For more information about conditional benefits, see SI 01150.200.