Should you Prepay your Funeral?

The costs of a funeral can add up, and when a loved one succumbs to sudden death, scrambling together the supplies for a memorial service can seem hectic and expensive. For men and women who are preparing one of these elaborate services, they may wonder where all the money is going to come from. That is why some older individuals will prepay their funerals in order to have the money ready when the time comes. While this can be a wise idea, there are also times that it can create confusion and cause your heirs to lose money.

For example, Evie Robinson prepaid her funeral with a full-burial policy in the 1970s, and passed away in 2008. Unfortunately, she never mentioned that she had purchased this policy, and her grieving children chose to pay for a memorial service and burial before they learned of the policy. When they discovered that they had spent money when there was already money reserved, they tried to get a refund. They were not successful, and contacted a company called On Your Side to help them argue for reimbursement.

Normally, modern life insurance and burial policies don’t have expiration dates on the payouts. Yet some of the older policies could have a redemption cause, which means that the claim must be filed within a certain period. On Robinson’s policy, there was a 30 day window to acquire a reimbursement. The Robinson family was eventually able to get about half of the burial policy money back from the funeral directors, and the other half was granted by Madison National Life, the company who provided the burial policy.

The average price of a burial with vault comes out to about $8,000. The National Funeral Directors Association and the Funeral Consumers Alliance don’t recommend purchasing a prepaid funeral plan, because they say that it could cause confusion, like it did for the Robinsons. Instead, professionals suggest that you set up a “payable upon death” bank account. This is a savings account that cannot be accessed until your passing, and can be specifically designated to cover the costs of a burial and funeral. Unlike a policy, this account can earn interest, and will be available in case of an emergency.

As well, the account may have enough money to provide additional financial support to your family at your death. It’s important that you talk to your spouse and children about your funeral plans. Avoiding the topic won’t stave off death, and may leave your family at a loss as to what to do if you pass away. If you don’t talk about funeral plans, things will be more difficult for your family as they scramble to create a memorial service that you would want. As well, if you have not planned for your burial, you family may end up spending thousands. More than likely they will not take the cheap way out when it comes to your funeral. Instead, they will want to create a beautiful and commemorative service which will honor you. They will spend massive amounts of money, even if they can’t afford it, in order to make sure that you are remembered.

Provide financial relief by setting up a payable upon death account right away. You can also designate in your will that you would like your funeral expenses to be paid out of your estate. Without a will, the courts will probably assume that this was your desire, and will deduct those costs when they are entering probate on your estate. Talk to a probate attorney today for more information about planning for your funeral in a beneficial way.