Many clients find the idea of making advanced funeral arrangements very appealing, in terms of both ensuring your final wishes are respected but also to relieve your family of the stress and financial burden associated with making these decisions. Advanced planning allows you to compare prices and options, make informed choices, and discuss your preferences with your family.
Pre-paying your funeral expenses can result in lower costs, because you are paying for tomorrow’s funeral at today’s prices. Not only can pre-paying these expenses help you avoid price inflation years down the road, but you may be able to pay for these services in installments over time.
One popular option for pre-paying your funeral expenses is through the execution of a pre-need funeral trust agreement. A pre-need funeral trust agreement is a financial contract with a funeral home, cemetery or cremation service to pay for the costs of a funeral in advance. Anyone, regardless of age or health, can set up a pre-need trust. The funds you place in your pre-need trust fund remain your money. And, those funds can only be used for the purposes you specify in your pre-need contract. When the time comes, your trust funds are available, per the pre-need contract you arranged, to cover the specific funeral arrangements you authorized. This trust is not subject to probate.
How this works: You’ll work with a service counselor at your chosen funeral home, cemetery, or cremation service to determine what options are available. These might include: a traditional funeral service, memorial service, burial, entombment, cremation, scattering at sea, or inurnment, among others. Your choices will be summarized in a written pre-need contract. The amount of the pre-need contract establishes the amount you should put in your pre-need trust. Your pre-need statement of goods and services, and your pre-need trust contract should be kept with your key records so that they can easily be found at the time of need.
A pre-need funeral trust agreement may not be for everyone. There may be expenses associated with the creation of a trust and benefits are not always guaranteed. At the very least, before signing on the dotted line, you should know the answers to the following questions:
- Are the costs guaranteed?
- Is the entire amount due up front or can payments be made over time?
- What are the cancellation terms?
- If the trust fund increases in value, who will receive any remaining money after the contract is fulfilled?
- What happens if the death occurs before the trust is paid in full?
- What happens if the funeral home goes out of business? Is your plan taken over by another funeral home? If so, which one?
- Are trust funds protected from creditors of the funeral home?
- Can the funeral arrangements be transferred to another funeral home?