Prepaid funeral plans got popular because they provide the opportunity to pre-arrange your funeral while you are still alive. By doing so, you relieve the burden of making decisions from your loved ones at a time when they are grief stricken. Since the average funeral in the US cost $6,000 with some as high as $10,000, many people opt not to put the burden on their family at such an emotional time and thus the idea for such prepaid plans.
The main intention is to leave some assets to your loved ones and not to leave a bill for them to foot. After all $6,000 can be a lot of money for some. Couple that with children or relatives of varying financial status, it can add another dimension to an already emotional time. More so if death occurred unexpectedly. Even if you do have significant assets to leave for your beneficiaries, it may take a while before they get their share of your with probate and all.
Besides all that, it is a way for you to have some control on how elaborate or simple your funeral should be. Here’s a book that you might want to check out to plan for final arrangements.
For prepaid funeral plans, a contract is made between the person buying the plan and the legal agreement that says you will pay for funeral services now that will be needed in the future. The contract will state what is included and what is not and will have provisions for the funeral, burial, cremation and/or misc services. You can pay with money, insurance, or an investment that you own.
The intention of prepaid funerals are great. However, there are also disadvantages to including reported abuses, mismanaged and stolen funds. Compounding the problem is mortuaries that go out of business or people relocating to another part of the country. Some plans charge a high penalty for withdrawal or transfers.
If you want to set aside a sum of money to pay for your final arrangements, an alternative solution is to create a Totten Trust, which is an account earmarkeded to pay for your final arrangements.
Unlike money applied to traditional funeral prepayment plans, the trust funds are easily transferred or withdrawn if required. Furthermore, you have complete control over the money during your life. This trust is easy to set up. You just have to contact a bank or savings institution and earmark the account as such.
However if you still want to get a prepaid funeral, then at the very least, read the contract. You must verify and be satisfied that the company is legitimate and be financially stable. Shop around and get recommendations. It must be licensed and certified to do the particular undertaking.
You should carefully examine and understand all the provisions of the contract before signing it. Pay attention to provisions pertaining to the coverage as well as the exclusions. Look for a contract that is revocable. This should allow you to withdraw from the contract anytime and at will given the rules on equitable reimbursements. Some prepaid funeral contracts are not revocable and you should avoid these if possible.
