Should You Preplan Your Funeral
January 20, 2015 | Your Finances
If you think talking about your funeral is uncomfortable now, imagine how uncomfortable it could be for your loved ones if you die unexpectedly without leaving any instructions. Funeral directors across the country have seen bereaved children struggling with critical decisions when they are ill-equipped to do so. Burial or cremation? Service in your hometown or where you raised your family? A final resting place next to your first husband or second—or neither?
Unless you’ve talked about your wishes with them, your loved ones are making their best guess, and it can lead to anxiety or arguments about everything from the cost to what you’re going to wear at the viewing.
What Goes into Your Plan?
Preplanning a funeral can be as simple as jotting down some notes and giving a copy to several family members or friends. Some people choose a funeral director and keep a copy on file in the director’s office. Most plans include instructions for the visitation and service, as well as preferences for cremation or burial. Some states have enacted statutes that create a legal framework for plans. In addition, some states have generated forms for documenting a plan and identifying who has the legal authority to administer it. Using a state-generated form, if available, can save time and ensure that all of the fundamental bases of a plan have been covered.
Some plans are more elaborate, with specific requests for songs and readings, pallbearers, the minister and who will deliver the eulogy. “The plan can be as detailed as you want it to be,” says Bob Arrington, president-elect of the National Funeral Directors Association. Arrington has had requests for a treasured motorcycle in the chapel, a fishing boat at the front door and favorite Christmas trees in the visitation room. “It’s becoming more about the celebration of the person who died, rather than a cookie-cutter ceremony.”
A thorough plan should also include the names and contact information of friends, coworkers and associates that your family members might not otherwise know to contact.
Prepaying for Peace of Mind Now and Later
Preplanning is only the first part of the process. Prepaying means that your family members will not be burdened with the expense of your final wishes. Some people choose to set aside money in a special account or purchase a life insurance policy that can be used to cover the expenses.
“The advantage of a prefunding agreement is the funeral home will freeze the cost of the funeral at the time of the agreement. They’ll deliver 2024 goods and services at 2014 prices,” says Arrington. “I can’t think of another industry that will guarantee a price that far into the future.”
Prefunding a funeral with a reputable funeral director also has benefits for older adults who are spending down assets to qualify for Medicaid. A properly structured prepaid funeral is not considered an asset as far as Medicaid is concerned.
Check with your state’s Department of Health to learn the regulations covering prefunding in your area, including limits on the value of your agreement. Covered items include:
- Burial space, such as the casket or urn, mausoleum and vault, headstone or plaque; and
- Non-burial-space items, which may include embalming, transportation, use of funeral home facilities, clergy fees, death notices and flowers.
In some instances, you may be allowed $1,500 ($3,000 per couple) set aside in a burial fund or life insurance policy that Medicaid will not count among your assets. Medicaid also allows you to prepay for burial spaces for a spouse and immediate family members, including parents, children, siblings and certain in-laws. The rules are extremely complicated, so check with your state Medicaid office or consumer protection agency or with a nursing home social worker to ensure your plans will not impact your eligibility.
Do Your Homework to Avoid Fraud
According to the National Funeral Directors Association, in 2012 the median cost for an adult funeral in the U.S. is $7,045. With that large an investment, you want to choose a long-standing funeral director with a stellar record. Get recommendations from your friends. Shop around, and ask each director for a detailed list of exactly what the prepayment agreement entails.
Each state has its own regulations on how the funds must be handled. Generally, the funeral director must place your money in a trust or in an insurance policy until it is needed. Your state regulatory board conducts periodic audits of prepaid funds. Check for any complaints against the funeral directors you’re considering. The NFDA maintains a list of licensing boards and contact information for each state.
Finally, when preplanning or prefunding a funeral, remind yourself that the ceremony is not just a celebration of your life, but also a ritual to help your loved ones cope with their grief. Before you enter into any contracts, have a frank talk with your family and find out their thoughts for making that day both meaningful and comforting.