How to Pre-plan Your Funeral as Part of Your Estate Plan
As citizens of a culture that worships youth, most of us find it nearly impossible to admit our own mortality, much less make plans for that eventuality. Denial, however, offers no protection from the inevitable. As it turns out, we have far more to gain than to lose by sitting down in advance to plan for every contingency life may throw at us. To help you begin this important process, here is an essential item that should be on your list of basic estate planning objectives.
For survivors, the hours and days following a loved one’s death is no time for weighty decisions. For many Americans, however, this will be the first time they think about the preparations for their loved one’s funeral. Given the expense and the painful emotions often involved, survivors may be in no condition to make choices for themselves or their loved one. According to a survey of its membership by the National Funeral Directors Association, the average cost of a funeral today is $7,200. That’s an expense that can quickly escalate as survivors confront a bewildering range of options on everything, from the kind and quantity of flowers, to the quality of their loved one’s casket. A premium casket alone, for example, can exceed $15,000. Add in the expense of roses over carnations and live music over recorded music; and survivors can end up paying triple or quadruple the average funeral’s cost. Yet, without a plan to guide them, survivors may feel guilty about saying anything but “yes” to the best for their loved one.
Leaving these emotionally charged decisions to grieving family and friends, can pose an un-fair burden on them in their time of loss. That’s why a growing number of Americans are choosing to take matters into their own hands with Advance Funeral Planning.
Planning With A Funeral Home or Funding A Funeral—What is the Difference?
According to the American Association of Retired Persons, over 21 million U.S. consumers age 50 and over have made pre-arrangements for their own or a loved one’s funeral; representing a total of over $25 billion in prepaid funeral expenses. The National Funeral Directors Association reports that nearly 98 percent of all funeral homes have instituted some kind of pre-need planning program, making it easier than ever for Americans to plan their funeral well in advance. Generally, the process begins when individuals sit down with a funeral director to discuss the plans available to them. Once they’ve reviewed their plans with their spouse and their loved ones, they purchase a funeral package that reflects their wishes down to every possible detail. Consumers have several alternatives for pre-payment of their funeral plans. One is to purchase a life insurance policy with the funeral home named as the beneficiary. Or consumers can make payments in installments over months or years. Yet another alternative, they may work with a licensed funeral director to establish a regulated trust which will pay their funeral expenses.
All of these options entail “planning with a specific funeral home.” This method is riddled with potential problems. Some of the problems are well documented in recent scandals with funeral homes. These include funeral homes not honoring commitments, funeral homes being sold and the new buyer not honoring the contracts and funeral homes closing their doors!
A Better Alternative is Funding a Funeral Trust
A better option for pre-need funeral planning enables consumers to set aside funds for their funeral in a Funeral Trust funded by life insurance which earns interest, and which can be used at any funeral home in the country. After death, if there’s more money in the Funeral Trust than required to pay for the funeral, the excess money will go back to the estate or to a named beneficiary.
A Funeral Trust allows consumers to set aside funds that they earmark for the funeral and final expenses without having to go to a funeral home in advance. This allows people to take care of this important planning need with their trusted advisor and not have to face all of the details of planning their own funeral.
Funeral Trusts are funded with a guaranteed issue life insurance policy that anyone can qualify for regardless of their health. The Funeral Trust can be used at any funeral home in the country and the death benefits are paid out next business day to the funeral home of choice and any money left over is paid out immediately. In most states, the insurer does not even require a Death Certificate to pay out the claims so the money is there for the family when they need it the most. Also, since the trust uses a life insurance policy to fund the Funeral Trust, the interest growth that the money earns is not subject to income tax. Therefore, the entire amount of the money will be available for the funeral and final expenses.
Even though funeral funding takes care of a very important aspect of Funeral Planning, it is also important to plan your wishes in advance to relieve the burden on your family. There is an avalanche of information that is needed when someone passes way. The surviving family is required to provide a lot of information to the funeral home in order to complete the Death Certificate and to plan the memorial services.
The benefits of Funeral Planning using the Funeral Trust rather then prepaying at a funeral home makes sense. This goes beyond cost savings. For many families, it provides an important opportunity to talk about sensitive issues and concerns that might otherwise have gone unspoken, and it allows the family to decide together which funeral options will be most meaningful to them. In many ways, funeral planning allows families to lay the foundation for a faster process in the future. For many Americans, the discussion of their own funeral conjures up unwelcome thoughts of death. But once they overcome their initial resistance, most will find peace of mind, rather than discomfort, in knowing that all the details of this important task have been handled as they want them to be, in the most economical and efficient fashion.
Even though a death in the family can be a very traumatic event, with the proper planning, a lot of the difficulty can be reduced. This enables the family to focus on remembering their loved one instead of having to scramble around looking for lost documents or trying to figure out how they are going to pay for and plan the details of the funeral. Planning with a Funeral Trust provides protection for your assets, protection for your family and peace of mind for you. To learn more about funeral trusts or any other estate planning matters, please contact our office at (225) 465-1090 for a free 15-min consultation.
About Our Law Firm
Progeny Law Firm is devoted exclusively to estate planning. We are members of the American Academy of Estate Planning Attorneys. We offer guidance and advice to our clients in every area of estate planning. This list offers a sampling of these services.
- Wills. Prepare a Will or other document to out-line your wishes.
- Revocable Family Wealth Trust. Prepare comprehensive, customized plans according to your needs.
- Special Needs and Divorce Protection. Pro-tect loved ones and get informed advice on these important estate planning issues.
- Asset Protection. Receive guidance on pro-tecting your legacy.
- Retirement Planning. Ensure that your tax-deferred accounts are properly structured to give your family the greatest tax advantages possible.
- Long-Term Health Care. Make sure you have properly outlined necessary health care instructions.
- Creditor Protection. Find out how you can protect your estate and your heirs.
- Structured Buy-Out Plans. The plan you create for your children to sell or distribute land and assets.
- Trust Administration. Distributing your estate after the first and second spouses pass away according to the way your Trust dictates.
- Advanced Planning. Get assistance with matters such as Family Limited Partnerships, Irrevocable Life Insurance Trusts, Charitable Remainder Trusts and Business Succession Planning.
- Probate Assistance. Get the assistance you need when someone with or without a Will passes away.
- Updating Documents. Ensure that your affairs are in order with regular estate reviews. Amend or restate your existing estate plan to ensure its effectiveness.
- Tax Planning. Preserve your wealth and reduce taxes with proper planning.
- Our sister firm, Progeny Wealth Management, provides comprehensive financial planning and insurance services, including asset management, life insurance, and funeral trusts.