Funerals: To Pre-Plan Or Not Pre-Plan That Is The Question
Most of us don’t really like to think about death at all, let alone our own. So spending a spare afternoon pre-planning your own funeral is probably not high on your to-do list.
But here’s another thing you probably haven’t thought much about: pre-planning your own funeral may be one of the best gifts you will ever give the people you love. It relieves them of having to make decisions in the midst of their own grief.
And here’s another secret: It is likely to give you peace of mind as well.
“Preplanning is really the best thing that ever happened. The state finally recognized that a person has the right to have the kind of burial and religious service that they wish,” said funeral director William “Bill” Harley, who has helped countless individuals, including the prominent clientele at Madison Avenue’s Frank E. Campbell’s, put their final wishes into writing.
You should know that there will be some financial decisions to be made at the time of the preplanning – and you will need to pick through the financial options carefully – but the payoff is the opportunity to make your own decisions.
Pre-arrangement is not only about how much to spend, but also about what kind of funeral you want. Are you leaning toward burial? Entombment? Cremation? Do you want an open-casket visitation? What about a religious service?
Just What is a Pre-arrangement?
A pre-arrangement is simply planning a funeral for oneself, or a loved one, in advance of the actual need. The funeral director will ask what type of funeral service you desire -–burial, entombment, or cremation-- and go over the details with you.
At the arrangement conference, you will make decisions about a religious service and visitation, as well as the casket, funeral merchandise and even your final disposition.
“You decide if you want burial or cremation, and what you want that to look like,” said Henry Johnston, who owns Johnston & Williams Funeral Home and Crematory in Washington State.
Funding the Preplan
If you decide to pre-pay the funeral, the funeral home will deposit the funds for you in a trust account administered by a third party, such as Cooperative Funeral Fund, Inc. (CFF). Based in Connecticut, the company provides exclusive service to funeral homes and cemeteries nationwide.
Some ask how safe the funds are.
Elizabeth Smith, Vice President, Trust Administration at CFF, said no one should worry. “Our funds are FDIC insured while they’re in the depository. Then they are swept into First State Trust Company and invested in US Treasury bonds, which are backed by the US government,” explained Smith.
They are just one of a number of preneed fund management companies around the country. Some states, like Washington, where Johnston’s two funeral homes are located also have the option of preneed insurance. When opening a fund, you have flexible payment options. You can open the account with a small down payment, then make periodic payments at your convenience. Or you can pay the entire amount in full.
“There’s no ceiling on what you can spend,” Harley said. “While social workers have sometimes told families the amount is capped at $10,000, Harley said that is not the case. “You can use your money in any manner, way, shape or form you wish. And today, it can include not only all the services and merchandise from the funeral home, but in revocable trusts you are also permitted to set aside money for flowers and a luncheon.” Harley added, “Given the rising costs of funeral and cemetery property, if you are on a limited budget, it’s an especially good idea as you have the ability to pay off the pre-arrangement interest free.”
Revocable vs Irrevocable
Pre-arrangements fall into two categories: revocable and irrevocable.
“The common denominators between the two are that the monies are deposited into an interest-bearing FDIC insured account,” said Harley. “Revocable simply means you can do whatever you wish. It doesn’t necessarily have to stay in effect. It’s whatever the owner wants to do. If you decide six years after you opened the account that you want your money back, that’s no problem.”
What’s more, aspects of the arrangements can be changed, and interest can be used toward additional items. “Irrevocable is usually, but not always, used in the case of a Medicaid spend-down. The whole purpose is so no outside agency can put a lien on your money for payment. The funds can only be earmarked for your funeral,” Harley explained.
Smith, of CFF stresses that “the most important thing for consumers to know is that if their trust is set up as irrevocable, they cannot get that money back. It must be used for their funeral.”
There is another reason to opt for an irrevocable contact: if you think your survivors won’t honor your wishes.
Johnston recalled an episode in which a couple told him they wanted to be buried, but did not want to pay in advance. They were concerned, however, that their children would not follow through with their last wishes, and cremate them instead.
He asked them a direct question: “Then you have to decide how much do you really trust your kids to abide by your wishes?” “If we set this up for burial, and pay for it now, then this funeral home is bound by law to honor this at the time of your death as if you were still alive and sitting right here making the choices.”
Prices May Be Guaranteed
Preplans that are “guaranteed” secure a funeral home’s current prices; the future interest on the savings will offset any increase in the costs of their services.
However, funeral homes do not make the same assurance for items that fall under the category of cash advances, and are monies paid to third parties.
“We can guarantee the funeral home services and merchandise, but we have no way of controlling the prices of the cemeteries, churches and monuments,” Harley noted.
Johnston, too, guarantees his funeral home’s merchandise and professional services as long as the “survivors don’t make any substantive changes at the time of the funeral.” As he sees it, “Guaranteeing is a great way to show value to folks who want to pre-pay because it locks in their prices.”
“Non-guaranteed” plans don’t carry the same assurance, and additional funds may be due at the time of the funeral. Still, like “guaranteed” plans, interest will accrue.
What If I’d Rather Not Pre-Pay?
If you don’t want to pre-pay, and are a disciplined saver, you can open a joint savings account (with a trusted other) exclusively for this purpose. However, pre-funded accounts through funeral homes typically offer better interest rates than banks are paying these days.
Either way, setting aside the money is beneficial.
Johnston recalls the story a fellow funeral director once told him to put preplanning into perspective. “‘Try walking into your local Dodge dealership and telling them that you want to buy a new 2045 Ram 1500, but you want to pay the price of an equivalent truck today. And when you take delivery of that truck, 25 years from now, you don’t want to pay anything else. They’d laugh you out of the showroom.’”
Johnston sometimes tells that story to his client families. “Since we’re in farm country, that really resonates with folks.”
Pre-arrangements Are Transferrable
There's an aspect of pre-need most people are probably unaware of: paid pre-need contracts are portable.
People are sometimes concerned that by making funeral arrangements in advance, they are locked into a particular funeral home. That is not the case.
“They are 100% transferrable in the United States, Canada and Puerto Rico,” said Harley.
So, if the funeral home closes, or you move to another state, the plan can move with you.
After a recent prearrangement Harley made for a woman going into a nursing home, her son turned to him and said, “This is much easier than I thought.”.
“Yes, it’s much easier when no one had passed away, and we’re under no pressure,” Harley replied.
Johnston agrees. “It really is a win-win both for the family –who doesn’t have to worry about the financial aspect of the funeral—and for the funeral home who will be there to fulfill the wishes of the deceased in the way that they wanted.”
About the Author:
Alexandra Kathryn Mosca works as a funeral director, and writer, in New York. She is the author of three books: Grave Undertakings, Green-Wood Cemetery and Gardens of Stone and has contributed articles to Newsday, New York Daily News, The Saturday Evening Post. Next Avenue, and funeral industry publications. You can reach Alexandra by visiting her website: www.alexandramosca.com
