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17.2.7.17 Irrevocable Trusts Created Prior to the Look Back Period: Payments Made to Anyone Other Than Institutionalized Person Any payment made from an irrevocable trust created with an institutionalized person’s assets that is not to or for the benefit of them during or after the look back period is an unallowable divestment and results in a penalty period, even if the trust was created prior to the look back period. 17.2.7.18 Trusts for Disabled Individuals Established or Funded After the Beneficiary Turns 65 When a third party establishes or adds funds to a trust for the benefit of a disabled person (see SECTION 17.2.6.2 TRUSTS FOR DISABLED INDIVIDUALS), it is an unallowable divestment and results in a penalty period for the third party unless either of the following conditions are met: • The beneficiary of the trust was disabled and under the age of 65 at the time of the transfer. • The beneficiary is third party’s disabled child. The divested amount is the total amount of funds transferred to establish the trust. 17.2.7.19 Irrevocably Assigned Life Insurance Funded Burial Contracts With a Remaining Cash Surrender Value Irrevocable life insurance funded burial contracts (LIFBC) must be evaluated as assets per 16.5.3.1 IRREVOCABLE ASSIGNMENT OF LIFE INSURANCE-FUNDED BURIAL CONTRACTS in order to evaluate for divestment. If the calculations of cash surrender value CSV have any amount left over, that amount is the divested amount. It is an unallowable divestment and results in a penalty period. Example 30 Les has irrevocably assigned the ownership of his life insurance policy to a funeral home to fund a burial contract. The face value of the LIFBC is $3,000. The Statement of Funeral Goods and Services shows $3,000 for the pre-arrangement of the funeral, of which $1,300 is designated for a casket and $1,700 for funeral expenses (services and cash advances for such things as flowers and the obituary). The $1,700 funeral expense portion reduces the $1,500 burial fund exclusion (see 16.5.5 BURIAL FUNDS), and so $1,500 of this LIFBC is his exempt burial fund. The $1,300 casket doesn’t reduce the burial fund exclusion (see 16.5.5 BURIAL FUNDS) and is not a countable asset because it is a purchase of a burial space. Because the LIFBC was assigned irrevocably, it must be determined if Les is receiving other goods or services at FMV for the remaining $200 designated for funeral expenses. If he is not receiving goods or services at fair market value, consider the remaining $200 a divestment. 17.2.7.20 Irrevocably Assigned Life Insurance Funded Burial Contracts With a Face Value That Exceeds the Statement of Funeral Goods and Services If the face value of the LIFBC exceeds the total amount shown on the Statement of Funeral Goods and Services, the cash surrender value of the LIFBC must be determined at the time it was assigned. Any portion of an irrevocably assigned LIFBC for which no goods and services are received at FMV is the divested amount. Example 31 Joey has irrevocably assigned the ownership of his life insurance policy to a funeral home to fund a burial contract. The face value and the cash value of the LIFBC is $3,200. The Statement of Funeral Goods and Services shows $3,000 for the pre-arrangement of the funeral. A divestment in the amount