By Mitch Adel
One of the tragic complications that often arise when a loved one passes away is that families can be faced with a wide range of surprisingly costly short-term expenses at a time when they are least equipped (emotionally or financially) to handle them. The average cost of a funeral has increased to nearly $9,000 in today’s market, and it is quite common for the price tag to exceed $10,000.
The need for immediate cash to cover these unwelcome but necessary funeral-related expenses is prompting many families and individuals to consider pre-planning and pre-paying for funerals or purchasing pre-need insurance policies. While these options are increasingly popular, seniors should review their options within the context of a comprehensive estate plan. Of course, it is prudent to discuss these options with family members. Should you plan now or can you wait until you are “older”? Think about this: if you become incompetent or die unexpectedly, you will not be able to make your wishes known to those you love.
Funeral planning should be part of a comprehensive estate plan. Elder law attorneys are experienced at counseling clients on such
matters and can help you clearly define how you want to carry out your last wishes. Your attorney may suggest that you write down your wishes in a legal document called a testamentum mortis that clearly states, for instance, whether you will be buried or cremat- ed, whether you want flowers or would prefer contributions to a charity, whether you want calling hours or a small, private service. If your family, like many, is reluctant to discuss your funeral plan, it can make it more difficult for them at your death.The written plan makes sure that your family knows what is important to you. It is your preferences in writing.
Once you’ve established your preferred funeral arrangements, it’s time to look at how to pay for your funeral options. You will need to evaluate how much you are willing to spend to fulfill your wishes. From there, your estate planning team can recommend solutions that work well with your overall plan. This may include writing a burial contract, creating a dedicated savings account or designating part of an existing trust to cover anticipated costs. Beyond these initial steps, there are a multitude of choices available, including funeral insurance that is typically offered by an insurance company and prepayment options offered by funeral homes, but not all are created equal. Funeral insurance plans typically allow your family the flexibility to determine which funeral home makes sense at the time of your death, rather than locking you in to a specific home.
Do your homework
Your estate planning team should do the basic research for you so that you have a range of options, but there are still important questions to ask before settling on a particular path or product.
If a pre-paid funeral plan is recommended, make sure you understand the risks. While these plans are increasingly popular, on occasion they can lead to an unfortunate surprise if a funeral home is mismanaged, goes out of business, consolidates with a national brand or enters into bankruptcy.While the vast majority of funeral
home operators are professional and trustworthy, your options can be limited in these cases. You should also consider what happens if you move out of state for warmer weather or to live with a child.What happens to the money you invested with a specific funeral home?
If funeral insurance is recommended, you should make sure you understand what happens at your death. What decisions will your family still have to make? How will your family get the money to the funeral home they choose? Are there any delays or other complica- tions they must face?
The bottom line is that planning to help your family deal with funeral expenses is a critical piece of a comprehensive estate plan. Protectingyourfamilyinaresponsiblewayfromcostlyfuneral-related expenses involves working closely with a qualified team of estate and
financial experts.Your team should understand your financial circum- stances and priorities so that they can advise you as to the pros and cons of the available plans.
However the finances are handled, make as many decisions as possible up-front to ease the burden on your family.