Are you thinking about arranging your funeral now long before deathcare services are actually needed? You’re not alone. It’s very pragmatic, saves your family a lot of stress and can reduce costs – if everything is handled correctly.
The truth is pre-paid funeral plans are a relatively new thing and aren’t well regulated in some states. This leaves consumers like you at the risk of paying for services that won’t be provided when you make advanced funeral arrangements. But don’t worry. We’re here to make sure that doesn’t happen.
Check out this quick guide with all of the essential information about paying for funeral services before you actually need them.
Know Your State’s Regulations for Pre-Paid Funeral Plans
Planning funeral arrangements ahead of time is always a good idea. However, many advanced arrangements, like creating a last will and testament, don’t involve paying for funeral services. Since payments are a part of the deal, a contract is required for a pre-paid funeral plan.
State governments have stepped in to help regulate the process so that consumers that enter into a contract have assurances and protections. Like other funeral regulations, this varies from one state to the next pretty dramatically. You’ll need to check with the state government department that’s in charge of regulating funeral homes and cemeteries to learn what your state requires.
Who Can Sell Pre-Paid Funeral Contracts
Not every funeral home can sell a pre-paid funeral plan. Here in Texas there are a lot of checks and balances to protect consumers. One regulation is that all sellers of pre-paid funeral contracts in the state must have a permit from the Texas Department of Banking.
How Pre-Paid Contacts Can Be Paid
Another factor that may be regulated by the state is how you can pay for a pre-paid funeral contract. More on the options for that are below. Here again we’ll use pre-planning a funeral in Texas as an example. In the Lone Star State pre-paid funeral plans can be paid through a trust or with insurance. Those are the only two options.
Understand the Options for Covering the Costs of Pre-Paid Funeral Plans
If you’re considering a pre-paid funeral plan in order to save money or pay for funeral costs over time, you’re in luck. Both are possible when you make advanced funeral arrangements, but they aren’t guaranteed. Some sellers offer installment payments over time while others require up front payment.
But there are a lot of different ways to pay for a pre-paid funeral plan. The options include:
Funeral Trusts
A funeral trust is one of the most popular payment options because it provides a lot of assurance for the consumer. The funeral home will establish the funeral trust for the express purpose of holding funds that are reserved for the services. That way the funeral home can’t spend the funds on anything else. Often funeral trusts are regulated by the state.
Bank Trust
You can also set up a trust with your bank to fund and pay for funeral services. Again, the money is reserved for the express purpose of paying for deathcare arrangements.
Funeral Insurance / Final Expense Insurance
There are now insurance policies that can be bought specifically for funeral services. These policies are known as funeral insurance plans, but they can go by other names like final expense insurance. Unlike other life insurance plans, with funeral insurance the funeral home or cemetery that’s providing the services will be named the benefactor.
Paying Through an Estate
Some families choose to pay for pre-paid funeral services through an estate because it can have tax benefits. In many cases, funeral costs are tax deductible when they are paid for by an estate, which helps save the beneficiaries some money.
Cash
The good old fashion way to pay for prepaid funeral services is with cash. But the funeral home may not take cash for a pre-paid funeral plan. You may need to write them a check or pay via direct deposit so that there is a record of the payment being made.
Choose the Funeral Home Carefully
Knowing your state’s regulations for prepaid funeral plans should help you find a reputable funeral home. Other standard due diligence we recommend includes:
- Look up the funeral home’s BBB rating and reviews online.
- Look at the funeral home’s operation history.
- Visit the funeral home in person and talk with the funeral director
Also, ask a lot of questions before signing the contract. The Federal Trade Commission (FTC) suggests that you ask the following:
- What if I want to end the pre-paid funeral contract before I die?
- If there’s a remaining balance when I die, how is the remainder paid?
- What happens if your funeral home closes or goes out of business?
- What happens if I move to another state or another city?
- Who gets the money if interest on the account is earned?
It’s crucial to get answers to any questions you have before you sign a contact. Once the contract is signed you likely won’t be able to make changes.
Have Everything Spelled Out in a Pre-Paid Funeral Plan Contract
Just as with a real estate contract or other major purchase, you want to make sure the pre-paid funeral contact is as detailed as possible and has everything in writing. In particular, you want everything that’s covered by the prepaid funeral contract to be clearly spelled out. That way whoever is managing the funeral arrangements after your death knows exactly what services should be provided.
Some funeral expenses that are commonly paid for in advance with a pre-paid funeral plan are:
- Fees associated with creating the pre-paid funeral plan contract
- Funeral service fee
- Cremation or burial fee
- Burial plot
- Cremation niche
- Casket
- Urn
- Funeral service
- Memorial service
- Transportation Fee
- Flowers
- Programs
- Announcements
Any answers that you received to the questions above should also be reflected in the contract. In particular it needs to note how the contract is being paid and what happens if the funeral home closes or can’t carry the contract out.
Cremation.Green is a well-established funeral home in Central Texas that has been leading the way in innovative eco-friendly funeral services. If you or a loved one is interested in making advanced funeral arrangements give us a call, text or email for more information.
