Planning a Funeral Ahead of Time and Prepaying

Why should I plan my funeral ahead of time?

Funeral arrangements will be a consideration for us all at some point in time and there are advantages to making them in advance. Funeral planning in advance:

• Puts you in control of your arrangements and ensures your wishes will be known.
• Provides social, psychological and emotional benefits to family and friends by relieving them of the stressful task of making arrangements at a difficult time.
• Allows you to set aside funds and relieve your family of a financial burden.
• Provides the peace of mind of knowing that “your affairs are in order.”

If I have planned my funeral in advance, should I also prepay it?

There are several good reasons to pre-fund your funeral:

• Ensure that money will be available — pre-funding ensures that an amount you consider appropriate will be earmarked for the funeral.
• Guaranteed prices — many providers will guarantee to deliver services and merchandise at today’s prices if you enter into a pre-need funeral or burial agreement and pre-fund your funeral.
• Financial management — pre-funding with funeral insurance can help you manage the value of your assets. For example, funeral insurance is not counted as a personal asset in determining eligibility for assistance from social service programs, such as Medicaid.

If I pre-pay for services or merchandise, how do I know that I will get what I paid for?

Most states have laws requiring that providers set aside a certain % of prepayments received in a trust account. This pertains to goods and services that are promised for future delivery. However, the trusting requirement can vary from 30% to 100% and the provider manages the trust. You should be cautious about making prepayments directly to your provider if the purchased items are not to be immediately delivered, especially if the trusting laws in your state are lax.

There are pre-funding options that allow you to maintain greater control. Funeral trusts and funeral insurance are methods of pre-funding a funeral that involve making payments to third parties (i.e., a bank or an insurance company) who will manage your funds until the time of the funeral. The third party will pay the providers when the pre-arranged services and merchandise are delivered. Generally, you have the right to change service providers, at any time, under either of these funding vehicles.

Can I change any of my pre-arranged funeral services at a later time? What if I have prepaid for them?

If you have entered into a pre-need funeral or burial contract, you need to carefully review the applicable terms. Is it flexible? Can you change the products and services? What happens if you move and want the funeral to be held in another city? Can it be transferred to another funeral director? What if the merchandise you have selected is no longer available at the time of the funeral? To what extent is the price guaranteed? Can the contract be cancelled?

Whether you have prepaid or not, the terms of your contract will govern whether you can make changes. Pre-funding with a funeral trust or funeral insurance generally offers greater flexibility to make changes than if you make prepayments directly to your provider.

Funeral Costs and Financing

How much can I expect a funeral to cost?

According to the 2016 price survey by the National Funeral Directors Association, the average cost of an adult funeral is $7,360. This is based on the most commonly selected items for a traditional funeral including a casket and vault. However, it does not include cemetery costs. A grave space, a grave marker, and opening/closing the grave can easily cost another $1,500 to $2,500. Therefore, a typical traditional funeral is likely to cost nearly $9,000.

Depending upon the quality of the casket, burial vault and other merchandise selected, a traditional funeral can cost less than $6,000 or exceed $10,000. If no services to commemorate the deceased are desired, a direct burial or direct cremation can be arranged for under $1,000.

Are there ways to save money without sacrificing the quality of the funeral proceedings?

A funeral doesn’t have to be expensive to be meaningful. Careful planning takes into consideration the costs vs. benefits of the various options for funeral services and merchandise. Allocate more of your funeral dollars to those items that have the most meaning to you. A casket of the highest quality may be of the utmost importance. Or you may choose to go with a rental casket to free more dollars for a mausoleum crypt or an extended visitation period.

Funeral planning in advance is the key because it allows you the time to carefully consider your options and to “shop” and compare prices. By planning ahead and pre-funding your funeral, you can lock in today’s prices with a price guaranteed funeral contract.

Who is responsible for payment of funeral services?

Funeral homes, cemeteries and other service providers expect to receive payment in full at the time of the funeral. The deceased’s estate is ultimately responsible for funeral costs, but funds might not be readily available due to probate proceedings or the estate might not have sufficient assets to cover the funeral. As a practical matter, surviving family members generally assume responsibility for payment.

If the deceased is covered by life insurance, funeral providers will oftentimes accept an assignment of life insurance benefits. Many providers will accept payment by credit card and some have established convenient loan arrangements with a financial institution.