PREPLANNING AND PREPAYING FOR A FUNERAL
Preplanning a funeral can offer family members peace of mind, as well as the opportunity to plan a meaningful funeral that reflects the unique life of the individual. Meeting with a local NFDA funeral director is a good way to ensure you have all of the information you need to make informed decisions, and that your wishes are carried out. Before making any decisions on preplanning or prefunding funeral goods or services, or signing a preneed funeral contract, we urge you to ask any and all questions you may have regarding the planning process.
An ethical and reputable NFDA funeral home will ensure the following rights and protections:
| • | | Provide you with detailed price lists of goods and services before you make your selections. |
| • | | Provide to you, at the conclusion of the funeral arrangement conference, a written statement listing all of the goods and services you have purchased and the price. |
| • | | Give you a written preneed funeral contract explaining, in plain language, your rights and obligations. |
| • | | Guarantee in the contract that if any of the goods or services you have selected are not available at the time of need, goods and services of equal or greater value will be substituted at no extra cost. |
| • | | Explain in the contract the geographical boundaries of the funeral home’s service area and under what circumstances you can transfer the preneed contract to another funeral home if you were to relocate, or if the death were to occur outside of the service area. |
| • | | State in the contract where and how much of the funds you pay will be deposited until the funeral is provided. |
| • | | Explain in the contract who will be responsible for paying taxes on any income or interest generated by the preneed funds that are invested. |
| • | | Inform you in the contract whether, and to what extent, the funeral home will guarantee the price of goods and services you are purchasing. If the prices are not guaranteed, the contract will explain who is responsible for any additional amounts that may be due at the time of the funeral. |
| • | | Explain in the contract whether and under what circumstances you may cancel your preneed contract and how much of the funds you paid will be refunded. |
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| There are several methods available to pre-pay for a funeral: |
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| • | | A regulated trust can be established by a licensed funeral director. |
| • | | A life-insurance policy can be purchased, equal to the value of the funeral. |
| • | | · Individuals can establish a savings or certificate of deposit account earmarked for funeral expenses. The account can be designated as “payable on death” (POD) to the funeral home. |
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| Each method has its advantages. To help determine which option is best for you, make sure to ask your funeral director the following questions: Who receives the interest on the account? |
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| • | | Who must pay taxes on the interest? |
| • | | Is the prepayment ever refundable, in part or in full? |
| • | | Can the plan be used at a funeral home of your choice? |
| • | | What happens if the funeral home goes out of business or is sold? |
| • | | In the event that you move, is the prefunded plan transferable? |
| • | | Choose a licensed funeral director that has a good reputation in the community. |
| • | | Make sure your funds are secured. Ask your funeral director how the funds are invested and check over time to ensure the funds are keeping pace with inflation. |
| • | | Make sure your plan is flexible enough to allow alterations to the plans if you wish and/or may be transferred to a funeral director in another state in case you move. |
| • | | Consider carefully before accepting an irrevocable agreement (a contract that cannot be canceled.) Irrevocable agreements are helpful when eligibility for Supplemental Security Income (SSI), Medicaid or other public benefits are being determined but may limit your flexibility. |
| • | | Have a family member sit in during arrangements to help plan. |
| • | | Like any contract, before signing, read it carefully and make sure you understand all the provisions. Ask questions. |
| • | | · Keep a copy of your plan in a safe place. Inform a close family member or friend that you have made arrangements and where the documents are kept. · Make sure everything you talk about is put in writing. Get copies for you and your family. |
Two million people die every year in the United States. For consumers, funerals and burials are big businesses. A funeral is one of the most expensive events in one's life: the average cost of a traditional funeral is close to $6,000. If you add flowers, obituary notices, acknowledgment cards, burial liners or vaults and special transportation, your costs go up. When emotions are high, it can be hard to remember that the cost of a funeral is not a measure of your feelings for the deceased. It's not unusual for a family to spend $10,000 for a funeral today.
Most people don't have much experience in making funeral arrangements, so it is hard to feel prepared. Making decisions can be difficult because we aren't familiar with funeral goods or services, and we may be experiencing strong emotions when a loved one has died. Make funeral arrangements a part of your overall estate planning. If you wish, you can pre-plan the ceremony, select the music, or design the memorial cards, all without paying in advance.
Shopping for Funerals
The Federal Trade Commission, through the Funeral Rule, requires all funeral providers to give consumers accurate, up-to-date itemized pricing information.
The Funeral Rule requires a provider to give you free copies of price lists when you visit a funeral home. The lists show what options are available and how much each option costs. Funeral homes, but not cemeteries, must also tell you prices over the telephone. Many funeral homes will mail their price lists to you, although the law does not require this.
Many people select a funeral home based on family tradition, location, or reputation. That can be costly. If you choose a provider without comparing prices, you may pay more than necessary. It is wise to call or visit at least two funeral homes and compare prices before you make a selection.
Many individuals will obtain three seperate price lists from each provider: a general price list, a casket price list, and an outer burial container price list. He used all three lists to compare the total costs for goods and services.
Price Lists
The general price list itemizes the cost of every service and product the provider offers. It may include:
| • | | Fee for the funeral director's professional services: conference, consultation, paperwork and overhead. |
| • | | Transportation, care, and preparation of the body. · Fee for facilities and staff to conduct a viewing, wake, visitation, or funeral or memorial ceremony. |
| • | | Flowers, music, and preparing obituary notices and cards. |
General price lists usually include the costs for alternative arrangements. One alternative is an immediate burial, when the body is buried without embalming, usually in a simple container. There is no viewing or ceremony with the body present. A package price for immediate burial would include the funeral director's fee, transportation and care of the body. It may not include the charge for a container, casket or simple pine box.
Another alternative is direct cremation, which costs from $300 to $600. If you choose direct cremation without a wake or viewing of the body, you would pay for the funeral director's services, a non-metal container for the body, the cost of transporting the body to the crematorium and an urn for the ashes.
Under the federal Funeral Rule, a funeral home cannot add a charge if you choose to purchase a casket from an outside source. If you choose direct cremation, an immediate burial or to donate a body to science, no casket is needed.
The funeral director explained the third price list for the outer burial containers. Most cemeteries require the use of a grave liner or vault to surround the casket in the grave. The outer burial containers prevent the ground from sinking as the earth settles over time. In some areas, both funeral homes and cemeteries sell vaults and liners. In others areas you may be able to purchase an outer burial container from a third party and have it delivered to the cemetery. You can collect outer burial container price lists from several providers and compare the costs of a particular model.
Should You Prepay or Not?
AARP urges you to be cautious about signing a pre-need contract or making other financial arrangements with a provider to pay for your funeral in advance. In the past, some people lost money when companies were involved in fraud, bankruptcy or mismanagement of the funds. Before you make a commitment, find out where your money will be kept and what the terms are. Ask the provider what will happen if you move and wish for the funeral to be elsewhere. Can you transfer the contract to a new city or get a refund?
Even if you don't prepay the funeral provider, there are many ways to set aside the money for your funeral. You can use a separate account, like a certificate of deposit. You can create a shared bank account with someone close to you, who will use the money for your funeral. People who need to become eligible for Medicaid can set aside a certain amount of money for a funeral. This is governed by the law in your state.
Works Cited
National Funeral Directors Association, http://nfda.org/
National Funeral Directors Association, Bill of Rights Preplanning, http://nfda.org/page.php?pID=30
AARP, Preplanning Funeral Arrangements, http://aarp.org/
