Pre-planning your funeral is not easy, but doing so can help your loved ones focus on celebrating your life and honoring your legacy.
By deciding on a funeral home, burial or cremation and, perhaps, prepaying a portion of the costs, you can help family members understand your wishes and alleviate some of the financial burdens. The cost of a funeral ranges from $8,000 to $10,000, including a typical casket.
These five steps will help you help your family and loved ones:
1. Make Sure You Have an Up-to-Date Will
If you don’t have a will, a probate court judge will decide how to distribute whatever assets you owned to your heirs. If you don’t have a will, your loved ones might feel uncertain about what to do with your assets, or worse, be more likely to fight over them.
2. Consider a Payable-on-Death (POD) Bank Account
Banks or credit unions allow account owners to add POD agreements to their bank deposits. Free, the agreements allow for the transfer of all accounts, U.S. savings bonds and certificates of deposit directly to beneficiaries. A Transfer-on-Death (TOD) arrangement is similar to a POD, but deals with an account owner’s investments.
3. Decide What to Do With What Remains
Options for services include funerals and direct burials. Options for burial include in-ground burial, above-ground burial, private or community mausoleum, and natural burial.
A typical funeral includes a viewing or visitation and service. A hearse moves the body to the funeral location and cemetery. Funeral home fees include embalming, dressing the remains, and renting the site for the service.
Caskets are metal, wood, fiberboard, fiberglass or plastic. The average casket costs more than $2,000, but fancier caskets such as mahogany or copper caskets could cost up to $10,000.
In a direct burial, the person is buried shortly after death in a burial container. People who opt for this may plan a memorial service later. Because there is no viewing or embalming, these expenses to the funeral home no longer apply.
Funeral providers must offer to provide an alternative container in place of a casket.
"Ashes to ashes, dust to dust" has a different meaning in a natural burial.
Natural burial is where the cremated remains are put in a biodegradable container destined for a wildlife conservation area or natural woodland area. The cost of this type of burial is substantially less, perhaps a few thousand dollars.
4. Consider Prepayment for Your Memorial Arrangements
A prepaid funeral plan can be reassuring, but it also carries some risk. A family may be left holding the bag if a funeral home goes out of business, or if for some reason memorial services aren’t held at that funeral home.
There are alternatives to putting the money in the hands of the funeral home, such as setting aside a sum in cash or using a life insurance policy. They can provide protection for your family.
My father, for instance, purchased his burial plots for himself and my mother. We paid for the funeral service from cash reserves. Alternatively, a beneficiary can assign all or a portion of life insurance proceeds to a funeral home.
If you want to use a prepaid plan for your memorial or funeral service, know what your state’s laws offer in the way of protection. Also, ask the funeral home what will happen to the money set aside for funeral costs. Investigate cancellation policies. Obtain everything in writing.
The Federal Trade Commission requires a funeral home/provider to offer an itemized statement of the total cost of your memorial arrangements when you make them.
5. Shop Around
Though your family might have one funeral home and one burial place it traditionally uses, you might want to compare prices after you have determined what you want in a memorial for your family.
A time of grieving is never easy, but by making decisions now on costs and wishes, you alleviate some of the stress on your family during a difficult time. A CFP® professional can help you think through the options, prepare an estate plan and determine how to communicate it with your loved ones.