Frequently Asked Questions about Pre-Planning Funeral Services

Should I prearrange my funeral or burial?

By prearranging, you will be able to make more informed decisions regarding the details of your funeral, cemetery arrangements, and the style of your memorial. Prearrangement allows you to compare the various services, products, and prices offered by different companies. Prearrangement is a hands-on process – you will be able to make choices that are meaningful to you and your family. By taking charge of your funeral details in advance, you will have peace of mind knowing that your loved ones are relieved of the emotional and financial strains that come from making arrangements suddenly after a death has occurred. In addition, by prearranging, a guaranteed price contract can be put into place that allows you to purchase at today’s prices, free from any future inflation, whenever your funeral/burial take place.

If I pre-plan and prepay my funeral or burial, how do I know that the money will be there when I die?

Two methods exist to ensure the funeral home and/or cemetery’s performance if you chose to pre-pay for your funeral or burial:

  1. Your money can be used toward a premium to purchase life insurance. In this case, the policy proceeds will pay for your arrangements. If you have chosen to purchase a life insurance policy to fund the prearrangement and you die while you are still paying for your pre-arrangement plan, the balance will be automatically paid.
  2. Your funds – either the entire amount or a portion of them – can be deposited into a trust fund account to defray the provider’s cost. If you have chosen to open a trust fund account and you die while you are still paying for your pre-arrangement plan, your family/loved ones must pay the remaining balance.

Both methods have their advantages and disadvantages, and the details of both plans should be disclosed to you. Your contract should state whether or not the purchase price is guaranteed (meaning, whether or not you or your loved ones will have to pay additional fees on the items you have selected in your contract). A guaranteed price contract ensures that no further payment will ever be required beyond the price stated in the contract for the items you are purchasing.

If I prepay my funeral, what happens to the interest that my money earns?

If you have a prearranged funeral or burial agreement in which the items you have purchased are guaranteed, the interest (or growth, if you have purchased a life insurance policy) is retained by the funeral home/cemetery. Prearrangement and prefunding allow you to pay for goods and services at today’s prices regardless of how much time passes between your prearrangement and your funeral/burial; the interest or growth accrued by your trust account or life insurance policy cover the inevitable rise in prices over time.

Can I change any of these prepaid funeral services later?

Yes, changes are generally possible, but it is not recommended that irrevocably assigned funeral plans be changed. When changes are made, they often affect the terms of guarantees that were created under the original agreement. If funds paid toward a funeral plan are excludable resources for the purpose of receiving social services (SSI or Medicaid), changing the terms of that agreement might jeopardize qualification for assistance.

What if your funeral home or cemetery changes ownership?

Don’t worry. The details of your care will not be affected if your funeral home changes hands. The funeral planning agreement you have arranged with the current owners is carried forward to their successors as part of the purchase agreement.

Is there a pre-payment penalty for paying off these arrangements in advance?

A small processing fee associated with pre-payment is not uncommon, but this fee should not be construed as a “penalty.” The prearrangement process allows you to save money in the long run as the prices of funeral-related goods increase over time. Funding agreements vary, so please be sure to check the terms of your funding agreement (or proposed funding agreement) for details.

Can social services take my pre-arrangements away from me?

No, social services cannot take away your pre-arrangements. However, they can challenge the amount you have set aside to pay for an expensive funeral. Funds set aside to pay for reasonably-priced funeral arrangements are not counted as assets as one qualifies for social services. Counsel can be provided to you to inform you of the amounts local social services agencies consider reasonable and customary to spend on a funeral.