The Peaceful Path: Exploring the Benefits of Funeral Preplanning

Death often comes with a mix of emotions and logistical challenges for loved ones left behind. 

However, one way to ease the burden on your family members and ensure that your final wishes are respected is through funeral preplanning. 

Funeral preplanning doesn’t necessarily include prepaying. Prepaying is optional but the vast majority prepay when they preplan. 

For the sake of this article, we are going to assume that when you preplan your funeral, you are also prepaying.

What Does Funeral Preplanning Cover?

Funeral preplanning is a proactive and thoughtful process of making arrangements for one’s own funeral or memorial service. 

It allows individuals to make important decisions and provide peace of mind for both themselves and their loved ones. 

Preplanning typically encompasses various aspects including the following: 

• Funeral Director’s Services: This includes the professional services of the funeral director and their staff, who assist with the funeral preplanning and coordination of the funeral arrangements.
• Body Preparation: This covers the embalming or other preparation of the deceased, including dressing, cosmetology, and casketing.
• Casket or Urn: A prepaid funeral plan usually includes the cost of a casket for burial or an urn for cremation. The plan may offer a selection of caskets or urns to choose from, depending on the options provided by the funeral home.
• Funeral Ceremony or Memorial Service: The plan typically covers the expenses associated with the funeral service, including the use of the funeral home, the staffing required, and any necessary equipment.
• Basic Stationary and Documentation: This includes the preparation of essential documents, such as death certificates, permits, and other necessary paperwork. The plan may also include basic printed materials, such as funeral programs or memorial cards.
• Burial or Cremation Fees: The prepaid plan typically covers either the burial cost in a cemetery plot or the cremation cost, including the necessary fees associated with these processes.

Once you have finalized the list of desired inclusions, the funeral home director will determine the price, which will serve as the basis for your prepaid plan. 

When purchasing a prepaid funeral plan, you have the option to choose a guaranteed or non-guaranteed plan. 

• Guaranteed Plan: This type of plan ensures that the specified goods and services are locked in at the agreed-upon price, even if prices increase in the future. This protects your loved ones from having to pay additional costs. 
• Non-Guaranteed Plans: This does not provide this price protection. Consequently, if you select a $3,000 casket and the same casket at the time of your passing costs $6,000, your loved ones would be responsible for the additional $3,000.

Advantages of Preplanning Your Funeral

Funeral preplanning and prepaying ahead of time ensures that the ceremony and burial align with your desires. 

This provides peace of mind knowing your last wishes are taken care of. 

There are several additional benefits for yourself and your surviving family members: 

• Save Money: By prepaying your funeral, you secure the current rates and avoid the impact of future inflation. While it’s possible to plan your funeral without upfront payment or opt for an installment plan, paying in advance prevents the effects of inflation over many years or even decades.

• Ease the Burden On Your Loved Ones: The death of a loved one is always a traumatic experience. When that time eventually arrives, your loved ones will be in a vulnerable emotional state. By proactively planning your own funeral, you can alleviate the added stress and grief of making funeral arrangements during such a delicate time. By prepaying for your funeral, you additionally ease up the financial burden for your loved ones.  

• Save On Taxes: In general, funeral expenses are not tax deductible for individuals. However, there is an exception when the estate itself pays for the burial costs. In such cases, the IRS allows the estate to claim the funeral expenses as a deduction against its taxes, especially when utilizing a prepaid plan. It is crucial to consult a tax professional to ensure an accurate understanding of tax deductibility, as individual circumstances and regulations may vary.

• Shelter Assets from Medicaid: One potential reason for considering prepaying your funeral, burial, or cremation is to protect your assets from being counted towards Medicaid eligibility. By placing the funds in an irrevocable trust, the money can be excluded from your net assets when determining your eligibility for Supplemental Security Income (SSI) or Medicaid benefits. This strategy allows you to safeguard those specific funds for funeral expenses while potentially qualifying for the benefits you need.

• Avoid Rushed Decisions: By planning in advance, you have the opportunity to carefully explore all available options. Engaging in no-pressure planning allows you to think through your options and ensure that crucial details are considered without feeling rushed or pressured.

Cons of Preplanning Your Funeral

Funeral preplanning is never a bad idea, but prepaying for a funeral isn’t a perfect option either. 

There are several factors to consider before deciding if this is the best option for you. 

• The Funeral Home Can Go Out of Business: If the funeral home goes out of business, there is little recourse and no refunds for prepaid funerals. To address this concern, communicate directly with your chosen funeral home and inquire about their specific processes, safeguards, policies, and potential contingencies. Some funeral homes place the money in a trust in case of events like this. If the funeral home were to close the trust can be picked up by another funeral home. 

• Funeral Plans are Non-Transferable: If you end up moving to a new location later in life, your funeral plan may not move with you. In situations where you have a prearranged contract with one funeral home but pass away in a different location or wish to change funeral homes, your contract may not be transferable. Always thoroughly review the contract and discuss any potential transferability issues before prepaying. 

• No Refund: Preplanned arrangements may not align with your evolving wishes. If you have a change of heart or decide to handle your final expenses differently, you might not receive a refund for the prepaid funeral plan.

• Possible Funeral Scams: The Association of Certified Fraud Examiners has highlighted that prepaid funeral packages are frequently involved in scams. There have been instances where a single company’s fraud scheme exceeded $600 million in losses due to prearranged funeral costs. Research your chosen funeral home thoroughly, understand your state’s laws, and always read the fine print before committing to a plan.

• Unexpected Fees and Costs: While prepaying for your funeral expenses may give the impression of comprehensive coverage, additional fees and costs may still arise after your passing. Carefully review the terms and conditions of your prepaid plan to understand the extent of coverage and any potential financial obligations that may fall upon your loved ones. These may include obituary notices, transportation to the cemetery, catering and reception services, flowers, and so on.

• Possibility for the Funeral Home to Become Your Beneficiary: if you are using life insurance to pay for your funeral contract, this could entail the funeral director or home becoming the beneficiary of your policy. When this happens, your insurance funds go directly to the funeral home upon your passing and any remaining money (if there is any) may not be passed on to your family.
• Family Disagreements: Preplanning a funeral can sometimes lead to conflicts among family members. If your preplanned arrangements differ from what your loved ones expect or desire, it can cause tension and disagreements during an already emotional time.

Difference Between a Prepaid Funeral Plan vs. Funeral Insurance

Two common options for managing funeral-related expenses are prepaid funeral plans and funeral insurance. 

It’s important to understand the key differences between these two approaches, to help you make an informed decision about which option suits your needs best.

Prepaid Funeral Plan: A prepaid funeral plan is a comprehensive arrangement made with a funeral provider to cover specific funeral services and expenses in advance. 

• Service Customization: Allows you to specify your exact funeral preferences, including burial or cremation, the type of casket or urn, the choice of a funeral home, and details of the funeral service itself. 
• Cost Lock-In: Lock in the cost of the funeral services at the time of purchase. This can be particularly advantageous because funeral costs tend to rise over time.
• No Ongoing Premiums: Unlike funeral insurance, prepaid funeral plans do not require ongoing premiums or payments. You make a lump-sum payment upfront or in installments, and the funds are held in trust until they are needed.
• Provider Reliability: Choose your funeral provider ahead of time. Ensure they are established, reliable, with a good track record.
• Inflexibility: Prepaid plans are less flexible than funeral insurance. Changes to your preferences or circumstances may not be easily accommodated. 

Funeral Insurance: Funeral insurance, also known as burial insurance or final expense insurance, is a type of insurance policy specifically designed to cover funeral and burial expenses. 

• Great Flexibility: Funeral insurance is a cash payout that can be used worldwide. If there are additional funds, those can be used to pay for additional end-of-life expenses. 
• Additional Benefits: There are additional benefits in the form of policy riders, which offer added advantages.
• Payment: The payment is generally a fixed amount made directly to the beneficiary who is responsible for planning and paying for the funeral expenses. 
• Prices: Families have the opportunity to price-shop funeral services and find the best deal. 
• Potential Costs: If the cost of your funeral exceeds your benefits payout, your loved ones may still be required to cover the additional expenses. 

Questions to Ask Before Prepaying for A Funeral Plan

Before you decide on prepaying for a funeral plan, you need to ask a few questions that will guarantee you are making the best choice for you and your family. 

• What happens if I pass before the policy has been paid off?
• What does my plan cover?
• What happens if I move out of the state where I prepaid my funeral?
• What happens to the interest earned on my payments?
• Can I cancel and get a refund if I change my mind?
• If there is money left over, who gets it? 

8 Mistakes to Avoid When Preplanning A Funeral

Carefully assess your needs, and consult with a financial advisor or funeral preplanning professional to avoid these common mistakes: 

1. Making a Decision Based Only On Price: When comparing funeral packages, consider both price and value. Understand what’s included and what’s not. Look for a reasonably-priced funeral with a caring, knowledgeable staff. If possible, visit the funeral home or explore their website. 
2. Deciding Without Enough Information: Funeral preplanning doesn’t have to be complex, but without guidance from a funeral professional, you might overlook important steps. It’s essential to ask questions and be aware of all available options to make informed decisions. Choosing a reputable funeral home allows you to explore options at your own pace and can help you make the best choices for your specific needs. In the process of funeral preplanning, you do not have to pay in advance, meaning you have time to make your decision. 
3. Neglecting Everyone’s Needs: Keep in mind that funeral preplanning may sometimes serve as a way for the survivors to reflect, remember, honor, grieve, and bid farewell to the deceased. While funeral preplanning can be helpful to your loved ones, it may also be eliminating a meaningful and healing experience. 
4. Procrastinating: The best time to consider your end-of-life wishes is when you are healthy and can think clearly. By making decisions while young and strong, you can approach funeral preplanning without the weight of illness or grief. 
5. Not Communicating Wishes with Family Members: It is crucial to ensure that your funeral wishes are known and communicated effectively. Make sure your immediate family is aware of your funeral preplanning and communicate your wishes with them. If you have completed a funeral prearrangement, provide your family with the name of the funeral home to contact when the time comes.
6. Not Paying Correctly: Once you decide on funeral preplanning, you may want to consider prepaying as well. Prepaying for your funeral carries several benefits and tax breaks for your estate. While funeral costs will inevitably rise over time, this option can protect your financial interests and ease the burden on your family at the same time.
7. Omitting Funeral Service Needs: Funeral homes assist in planning personalized services and selecting necessary merchandise. Funeral homes and cemeteries collaborate to ensure a smooth process. Funeral preplanning prevents hasty scrambling for additional resources. 
8. Not Preplanning Completely: Funeral preplanning involves more than just purchasing cemetery space. Working with a funeral home to preplan the entire service helps address all details and budgets accurately. This avoids both underfunding and last-minute financial burdens. Having a full funeral plan is a gift of love for those you leave behind.

FAQs about Funeral Preplanning

Think In Advance and Consider Your Funeral Options

Funeral preplanning can be a thoughtful and considerate gift to your loved ones during a challenging time. It allows you to have control over your final arrangements, ensures your wishes are honored, and provides peace of mind. 

However, it’s crucial to approach funeral preplanning with caution, considering the advantages, and disadvantages, and asking the right questions to make informed decisions about whether to prepay for funeral expenses. 

Ultimately, the choice to preplan your funeral is a personal one, reflecting your values, beliefs, and desire to provide comfort and support to those you leave behind.