How to Pay for Funeral Expenses
Understand the cost., Consider pre-planning your funeral needs., Receive full disclosure on estimated costs., Pay in advance., Investigate death benefits., Establish a Totten Trust., Avoid purchasing plans from funeral directors.
Step-by-Step Guide
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Step 1: Understand the cost.
The average funeral costs $7,755 according to The National Funeral Directors Association.
For some this is not much but for others it is a number they cannot hope to reach.
This number is also a pay upfront proposition, as funeral homes will no longer accept payment plans.
So when you are thinking about planning ahead, know that this is the number you need to target.You should be able to get a very simple, basic funeral done for approximately $3,000 in many parts of the United States.
So the less frills, the more affordable it is.
Consider cremation as a basic direct cremation costs approximately $1,000. -
Step 2: Consider pre-planning your funeral needs.
Making funeral decision arrangements while not in a time of emotional distress will allow you to make more level-headed choices in regards to necessary funeral items such as caskets, outer burial chambers, and more. , This includes an itemized breakdown of every line item for both funeral home costs as well as outside vendor expenses that are being billed through the funeral home establishment.
These can include flowers, music, clergy honorarium, and newspaper notifications.
Review all of these expenses to approve them before signing any contracts with the funeral home facility.
Keep this itemized list so that you and your loved ones can be sure to receive all that you have paid for. , Preplanned funerals can often take advantage of this option and, generally, do so via installment payments.
These can usually be made in any payment format, such as cash, money order, credit card or check.
Keep track of all receipts so the funeral isn’t paid for twice either by you, if you will be handling the end of life arrangements for another, or your family after you have passed on.
Be aware that funeral homes are a business.
They may try to up-sell you on additional goods and services that are not strictly necessary.
It’s best if your insurance company is one that takes care of and approves any additional expenses, as this cuts out the ‘’middle man’’ and eliminate these worries.There will, invariably, also be additional last-minute charges tacked on so put aside an extra $1,000-2,000 in savings just in case. , These will be part of the life insurance policy so you will need to speak to the insurance agent handling the policy on a regular basis to ensure that you have selected enough insurance to cover, or at least help to cover, the funeral expenses.
This is applicable to both yourself and any family members for which you are responsible.When you meet with the agent you can also discuss the payout procedure as well as the timing of it.
This way you will have a better understanding of when life insurance policy money will be available to you of your family in order to make funeral payments.
At the time of passing, the funeral director will need to be provided the life insurance policy details and who to contact so that he/she can call the insurance company and confirm the policy’s active status, the total benefits, etc.
Be certain not to sign away the entirety of the benefit but rather only the agreed upon good-faith estimate.
The rest should go to you.
This way you remain in control of the money and can approve or disapprove any additional costs.
Never disclose the total value of the life insurance policy to the funeral director or anyone at the funeral home.
It’s none of their business. , This you can do at your bank and guarantees that 100% of the money you put in remains in the trust earning interest for you.
If you decide later to be cremated instead, you can withdraw all of your money without penalty.
Should you or your loved one pass away, the deceased’s family controls the money in the trust, including any left over after funeral expenses are paid.Be aware that the funeral director will attempt to lure you into purchasing their trust by offering a higher percentage yield on your money, perhaps several points more.
The Totten Trust, however, will yield you more money in interest due to the myriad of rules associated with the funeral director’s trust AND will keep the money in your control at all times. , While sold as peace-of-mind options to make end of life decisions easier for you, these are often filled with arcane rules that take advantage of every bit of leverage for the funeral director and the company he/she works for, not you.Insurance policies purchased from a funeral director include restrictive fine print.
They also add their own fees and premiums to the total, and in most cases they are turning around and purchasing a plan from another provider at a deep discount.
Don’t put your money in their trust-based prepayment plans.
Most states only regulate a portion to be put in an interest-bearing account for you; the rest is put in an account to work for the funeral director.
Add in exorbitant fees for canceling or cashing out the trust, administrative fees, and continuing payments that, if not made in strict adherence to the policy, can lock up the trust and result in more administrative fees for the funeral director, and you can see the litany of reasons why you need to avoid this type of account. -
Step 3: Receive full disclosure on estimated costs.
-
Step 4: Pay in advance.
-
Step 5: Investigate death benefits.
-
Step 6: Establish a Totten Trust.
-
Step 7: Avoid purchasing plans from funeral directors.
Detailed Guide
The average funeral costs $7,755 according to The National Funeral Directors Association.
For some this is not much but for others it is a number they cannot hope to reach.
This number is also a pay upfront proposition, as funeral homes will no longer accept payment plans.
So when you are thinking about planning ahead, know that this is the number you need to target.You should be able to get a very simple, basic funeral done for approximately $3,000 in many parts of the United States.
So the less frills, the more affordable it is.
Consider cremation as a basic direct cremation costs approximately $1,000.
Making funeral decision arrangements while not in a time of emotional distress will allow you to make more level-headed choices in regards to necessary funeral items such as caskets, outer burial chambers, and more. , This includes an itemized breakdown of every line item for both funeral home costs as well as outside vendor expenses that are being billed through the funeral home establishment.
These can include flowers, music, clergy honorarium, and newspaper notifications.
Review all of these expenses to approve them before signing any contracts with the funeral home facility.
Keep this itemized list so that you and your loved ones can be sure to receive all that you have paid for. , Preplanned funerals can often take advantage of this option and, generally, do so via installment payments.
These can usually be made in any payment format, such as cash, money order, credit card or check.
Keep track of all receipts so the funeral isn’t paid for twice either by you, if you will be handling the end of life arrangements for another, or your family after you have passed on.
Be aware that funeral homes are a business.
They may try to up-sell you on additional goods and services that are not strictly necessary.
It’s best if your insurance company is one that takes care of and approves any additional expenses, as this cuts out the ‘’middle man’’ and eliminate these worries.There will, invariably, also be additional last-minute charges tacked on so put aside an extra $1,000-2,000 in savings just in case. , These will be part of the life insurance policy so you will need to speak to the insurance agent handling the policy on a regular basis to ensure that you have selected enough insurance to cover, or at least help to cover, the funeral expenses.
This is applicable to both yourself and any family members for which you are responsible.When you meet with the agent you can also discuss the payout procedure as well as the timing of it.
This way you will have a better understanding of when life insurance policy money will be available to you of your family in order to make funeral payments.
At the time of passing, the funeral director will need to be provided the life insurance policy details and who to contact so that he/she can call the insurance company and confirm the policy’s active status, the total benefits, etc.
Be certain not to sign away the entirety of the benefit but rather only the agreed upon good-faith estimate.
The rest should go to you.
This way you remain in control of the money and can approve or disapprove any additional costs.
Never disclose the total value of the life insurance policy to the funeral director or anyone at the funeral home.
It’s none of their business. , This you can do at your bank and guarantees that 100% of the money you put in remains in the trust earning interest for you.
If you decide later to be cremated instead, you can withdraw all of your money without penalty.
Should you or your loved one pass away, the deceased’s family controls the money in the trust, including any left over after funeral expenses are paid.Be aware that the funeral director will attempt to lure you into purchasing their trust by offering a higher percentage yield on your money, perhaps several points more.
The Totten Trust, however, will yield you more money in interest due to the myriad of rules associated with the funeral director’s trust AND will keep the money in your control at all times. , While sold as peace-of-mind options to make end of life decisions easier for you, these are often filled with arcane rules that take advantage of every bit of leverage for the funeral director and the company he/she works for, not you.Insurance policies purchased from a funeral director include restrictive fine print.
They also add their own fees and premiums to the total, and in most cases they are turning around and purchasing a plan from another provider at a deep discount.
Don’t put your money in their trust-based prepayment plans.
Most states only regulate a portion to be put in an interest-bearing account for you; the rest is put in an account to work for the funeral director.
Add in exorbitant fees for canceling or cashing out the trust, administrative fees, and continuing payments that, if not made in strict adherence to the policy, can lock up the trust and result in more administrative fees for the funeral director, and you can see the litany of reasons why you need to avoid this type of account.
About the Author
Karen Morales
Writer and educator with a focus on practical home improvement knowledge.
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