Preplan and prepay your funeral expenses so your children and heirs won't have to make expensive and difficult decisions while grieving. But not all pre-paid funeral contracts deliver on their promises as funeral homes go out of business, change hands, or raid the money consumers thought was safely invested in trust funds. Here's what you need to know about funeral prepayment plans.
Bring a loved one with you when preplanning.
Compare. The average cost of a funeral is $6,500, according to the National Funeral Directors Association—and that doesn't include cemetery costs and extras like flowers, obituary notices, and limousines that can quickly boost the price to well over $10,000. The Federal Trade Commission (FTC) requires funeral directors to give you itemized prices in writing and over the phone, and you can choose exactly which individual goods and services you want to purchase. The funeral provider may not refuse or charge a fee to handle a coffin you bought elsewhere.
Follow the money. Typically, the funeral director puts your money in a trust fund account until needed or purchases a life insurance policy that will be used for expenses. Each state has different laws governing the percentage of cash that must be kept in trust.
Ask about refunds and cancellations. Most states don't require full refunds if you cancel. Find out which circumstances allow you to cancel the contract and what percentage of your money will be returned if you want to change your plans. And ask if you can transfer the funds to a different funeral home should you decide to move out of the funeral home's service area.
Read the fine print. Contracts can differ greatly. If you die at a location outside the service area there may be an extra charge to transport you to the funeral home. Although embalming is usually covered by a prepaid plan, more involved processes may not be covered.
Planning for a Funeral
- Shop around in advance. Compare prices from at least two funeral homes. Remember that you can supply your own casket or urn.
- Ask for a price list. The law requires funeral homes to give you written price lists for products and services.
- Resist pressure to buy goods and services you don't really want or need.
- Avoid emotional overspending. It's not necessary to have the fanciest casket or the most elaborate funeral to properly honor a loved one.
- Recognize your rights. Laws regarding funerals and burials vary from state to state. It's a smart move to know which goods or services the law requires you to purchase and which are optional.
- Apply the same smart shopping techniques you use for other major purchases. You can cut costs by limiting the viewing to one day or one hour before the funeral, and by dressing your loved one in a favorite outfit instead of costly burial clothing.
- Plan ahead. It allows you to comparison shop without time constraints, creates an opportunity for family discussion, and lifts some of the burden from your family.
The Funeral Rule
The Funeral Rule, enforced by the FTC, makes it possible for you to choose only those goods and services you want or need and to pay only for those you select, whether you are making arrangements when a death occurs or in advance. The Rule allows you to compare prices among funeral homes, and makes it possible for you to select the funeral arrangements you want at the home you use. (The Rule does not apply to third-party sellers, such as casket and monument dealers, or to cemeteries that lack an on-site funeral home.)
To learn more about The Funeral Rule and prepaid funerals, visit: www.FTC.gov.