There are many reasons to make your funeral, burial or cremation arrangements in advance. The number one reason is pre-arranging allows you to choose the type of funeral, memorial or graveside service that will be held, as well as where your remains will be interred. While completing a last wishes planner is a great way to leave instructions to your survivors about your last wishes, pre-arranging your services with a funeral home or mortuary takes it one step further by allowing you to put a record of your preferences on file with the funeral home.By arranging your funeral services in advance, you take the burden off your partner, spouse, children or friends that may struggle to make difficult decisions while they are grieving. Prearrangement of services also allows you to reduce funeral and burial expenses and select the arrangements you prefer.
Although everyone can benefit from making funeral and burial arrangements in advance, the real debate is whether prepaying is in the consumerís best interest. Giving a mortuary money ahead of time comes with a lot of risks and downsides. The funeral industry refers to prearranging and prepaying as preneed. But do you really need it? Obviously, the funeral industry has a lot to gain from prepayment. But in most cases, prepaying offers little benefit to the consumer.
Alternatives to Prepaying for Funeral
If you want to make your final arrangements in advance, you can do so without paying for them ahead of time. It is perfectly acceptable to meet with a mortuary, review the services they provide, and let them know your memorial preferences. The funeral home can keep a record of your selections on file. The fees and costs for your services can be paid by your estate or from other funds you set aside.One alternative to prepaying a funeral home is to open a checking, savings or money market account at a bank and name the funeral home as beneficiary of the account in the event of your death. By depositing an amount adequate to cover your final arrangements in a pay on death account, you can ensure funds are available to pay for your funeral, burial or cremation while still maintaining control over the funds during your lifetime.A funeral trust is another way to make funds available for your final arrangements. Establishing a funeral trust allows you to set aside funds for payment of your funeral and burial expenses and protect the funds from the reach of creditors. If you will need Medicaid to pay for medical or nursing home care and are concerned about paying for funeral expenses, you may want to consider a funeral trust.Life insurance can also be used to pay for funeral, burial, and cremation costs. You can name a beneficiary you trust to carry out your last wishes, such as a relative or friend. Some people name the mortuary where their services have been prearranged as beneficiary. Funeral insurance plans are subject to frequent abuse. Before buying a funeral insurance plan from a funeral home, research the laws applicable to such a policy in your state and become informed of your rights as a consumer.
Reasons to Prepay Funeral Expenses
There are some circumstances in which prepaying for your final arrangements may be the right choice. For example, if you are alone or do not have a person you trust to use your estate assets to pay for your funeral services, paying for everything in advance may ease your mind. Also, if you may need Medicaid to pay for long-term care, it is important to understand the amount of assets you are allowed to own and how funeral and burial expenses should be handled as part of Medicaid planning.
If you believe you can get a significant price discount by prepaying, there may be some benefit to paying a mortuary ahead of time. However, if the package being offered to you seems too good to be true, do further research to determine how you can guarantee the funeral home will honor your contract after you are gone.
Even if you prepay for your final arrangements, you do not have complete control over whether your memorial preferences will be followed. In many states, your legal next of kin has legal authority to make decisions regarding the final disposition of your remains, even if those decisions are contrary to your own wishes. Some states have a statutory form you can use to appoint an agent to handle the disposition of your remains. For more information on this type of form, visit our Disposition of Remains page.Before you prepay for your funeral, contact the Funeral Consumers Alliance. They offer several publications that discuss the risks of giving a funeral home payment prior to your death and what you can do to make an informed decision about your funeral services. If you decide you want to set aside funds for your funeral but do not want to prepay, our website provides information about various alternatives to prepayment that may protect you from the possibility of fraud.
Disadvantages of Prepaying for Funeral
One of the biggest risks of prepaying for final arrangements is the funeral home may not be in business at the time of your death. If the mortuary closes, you may have no recourse to get your money back. Also, if you have to move out of state, the cost of having your remains transported back to the state where you prepaid for funeral services could be significant. Whether you want your money refunded because you moved or because you changed your mind about the type of services you want, it can be difficult to get any kind of refund on prepayment to a funeral home.
Another problem people encounter when prepaying for funerals is the price is likely to increase by the time the service is needed. The funeral home may tell your heirs or next of kin that the price on the items you ordered has changed, forcing them to come up with additional funds. Because prices vary widely for funeral goods and services, there is very little a consumer can do, other than go to a different funeral home, which may not be possible if you prepaid a large portion of the cost.
If you pay for your final arrangements in advance, your loved ones may be unaware of this and pay another mortuary for your funeral, burial or cremation. Even if you tell your family you made the arrangements, they may forget during a time of grief or due to the passage of time.
Finally, it is important to remember your financial circumstances may change. If there is any possibility you may need the money in the future, consider the alternatives to prepaying for your funeral arrangements. After you turn your money over to a funeral home, it is unlikely you will be able to get it back simply because you need it.
When Is It Okay To Discuss Final Arrangements and Burial
If you are responsible for handling the finances of a relative or friend suffering from a terminal illness or in an end of life situation, you may be considering prepaying for funeral arrangements to ensure enough assets are available to pay for funeral, cremation or burial.
Very often, we see family members having to discuss these issues together and make difficult decisions while their loved one is still alive about how to handle memorial preferences and last wishes. For tips on how to handle these uncomfortable discussions, see when is it okay to discuss final arrangements.