Sometimes it makes sense to spend down some assets in order to qualify for Medicaid. If you have few assets ($2 – 4k) and limited income (generally under $2k/mo), you might do this to qualify for Medicaid Only or the Medically Needy program. If you have more significant assets, you might do this when you are trying to qualify for Medicaid for Institutionalization (nursing home).
This is typically done when you or your spouse anticipate becoming eligible for Medicaid within six months. Medicaid allow you to put money in an irrevocable funeral/burial trust and that money will not be counted as an asset. Money in an irrevocable trust cannot be touched or disbursed until the time of death.