Prepaid Funerals

If you're thinking about prepaying for funeral goods and services, it's important to consider these issues before putting down any money:

• What are you are paying for? Are you buying only merchandise, like a casket and vault, or are you purchasing funeral services as well?
• What happens to the money you've prepaid? States have different requirements for handling funds paid for prearranged funeral services.
• What happens to the interest income on money that is prepaid and put into a trust account?
• Are you protected if the firm you dealt with goes out of business?
• Can you cancel the contract and get a full refund if you change your mind?
• What happens if you move to a different area or die while away from home? Some prepaid funeral plans can be transferred, but often at an added cost.

Bring a loved one with you when preplanning and be sure to tell your family about the plans you've made; let them know where the documents are filed. If your family isn't aware that you've made plans, your wishes may not be carried out. And if family members don't know that you've prepaid the funeral costs, they could end up paying for the same arrangements. You may wish to consult an attorney on the best way to ensure that your wishes are followed.

Compare. The average cost of a funeral is $6,500, according to the National Funeral Directors Association—and that doesn't include cemetery costs and extras like flowers, obituary notices, and limousines that can quickly boost the price to well over $10,000. The Federal Trade Commission (FTC) requires funeral directors to give you itemized prices in writing and over the phone, and you can choose exactly which individual goods and services you want to purchase. The funeral provider may not refuse or charge a fee to handle a coffin you bought elsewhere.

Follow the money. Typically, the funeral director puts your money in a trust fund account until needed or purchases a life insurance policy that will be used for expenses. Each state has different laws governing the percentage of cash that must be kept in trust.

Ask about refunds and cancellations. Most states don't require full refunds if you cancel. Find out which circumstances allow you to cancel the contract and what percentage of your money will be returned if you want to change your plans. And ask if you can transfer the funds to a different funeral home should you decide to move out of the funeral home's service area.

Read the fine print. Contracts can differ greatly. If you die at a location outside the service area there may be an extra charge to transport you to the funeral home. Although embalming is usually covered by a prepaid plan, more involved processes may not be covered.

The Federal Trade Commission has put together an easy to use checklist of common funeral expenses that will help with planning a funeral.

FUNERAL PRICING CHECKLIST

Check with several funeral homes to compare costs.

“Simple” disposition of the remains:

Immediate burial __________
Immediate cremation __________
If the cremation process is extra, how much is it? __________
Donation of the body to a medical school or hospital __________

“Traditional,” full-service burial or cremation:

Basic services fee for the funeral director and staff __________
Pickup of body __________
Embalming __________
Other preparation of body __________
Least expensive casket __________
Description, including model # __________
Outer Burial Container (vault) __________
Description __________
Visitation/viewing — staff and facilities __________
Funeral or memorial service — staff and facilities __________
Graveside service, including staff and equipment __________
Hearse __________
Other vehicles __________
Total __________

Other Services:

Forwarding body to another funeral home __________
Receiving body from another funeral home __________

Cemetery/Mausoleum Costs:

Cost of lot or crypt (if you don’t already own one) __________
Perpetual care __________
Opening and closing the grave or crypt __________
Grave liner, if required __________
Marker/monument (including setup) __________

The Funeral Rule, enforced by the FTC, makes it possible for you to choose only those goods and services you want or need and to pay only for those you select, whether you are making arrangements when a death occurs or in advance. The Rule allows you to compare prices among funeral homes, and makes it possible for you to select the funeral arrangements you want at the home you use. (The Rule does not apply to third-party sellers, such as casket and monument dealers, or to cemeteries that lack an on-site funeral home.)

Learn more about The FTC Funeral Rule.