This guide can help you get the information you need to make decisions when you prearrange your funeral. It can help you answer questions about the topics below. Simply click on a topic to learn more.
Many individuals and families are making the decision to prearrange their funerals. The advantages make sense.
Planning your own funeral…
Because of the number and types of programs available today to provide prearranged funerals, this Guide has been developed for the benefit of all consumers to use in making preneed funeral arrangements. This Guide is not intended to endorse any company, product, or type of funding arrangement.
Funeral Planning…Before the Need Arises
If you are going to make an informed choice when you prearrange your funeral, you need to: know what you want; how much you can afford to pay; if guarantees are provided on merchandise and services; what happens if you move and want to change funeral homes; the tax consequence of the funding arrangements, if any, and if you are protected against inflation.
When you prearrange a funeral, you want to arrange one which fits your needs today and into the future.
Prepaid Funeral Agreements
Generally, funeral plans consist of a two step process: making the funeral arrangements (preneed funeral contract) and second, funding the cost of the prearranged funeral through life insurance, bank trust agreement or other method. It is possible to select funeral goods and services. If you do either of these, you should be aware that the price of the funeral will usually not be guaranteed.
The preneed funeral contract should identify the person selling the contract, the person purchasing the contract, and the person for whom the contract is purchased. In several states, only funeral directors may prearrange your funeral. You should check you state laws and the credentials of the person selling the preneed funeral contract. If the person selling the contract is not with a funeral home, you should ask to see a copy of the agreement between the seller and the funeral home which you want to conduct your funeral.
The contract should contain a complete description of the merchandise and services purchased, and disclose the current price of the merchandise and services. If a unique service is requested, you should discuss this in detail with the funeral service professional to determine if the service can be provided.
Funeral service selections fall into two general categories; the services of funeral professional and funeral merchandise.
Funeral service selections usually include:
The funeral home is required by law to give you a general price list which contains the current cost of each individual item and service offered. It must also contain information on embalming, cash advance sales, containers for cremation and any required purchases. Cash advance items are goods and services that are paid by the funeral provider on your behalf, such as a cemetery plot, flowers, obituary notices, pallbearers, and clergy honoraria. Some funeral providers charge you their cost for these items while others add a service fee.The funeral provider receives a discount, refund or rebate for these items, he must disclose this fact to you.
You may, of course, choose any or all of those items you prefer. A funeral planning professional will be able and willing to help you with each of these steps. The contract should clearly state whether the provision of the supplies and services is guaranteed. A guaranteed funeral means that regardless of the retail price of the funeral at the time of death, there would be no obligation to pay additional money to the funeral provider. The guarantee may be limited if installment payments are selected as a method of payment.
The agreement should also state that goods and services of equal value will be substituted if the exact ones are not available at the time of need, at no extra cost. It should also clearly identify any items or services which are required and explain why. An example would be embalming, which may be required for direct cremation, and a vault may not be required in all instances. If you are considering the purchase and storage of a casket or other merchandise, you should consider factors such as the risk of loss, impact upon manufacturer warranties, and whether the funeral home selected will agree to accept the merchandise for use.
The contract should disclose any penalty or restriction, including geographic restriction, on the funeral homes' ability to perform.
Cemetery arrangements should be discussed well in advance, too. Some questions you should ask when deciding on a plot are:
Types of Funding Available
Medicaid and Supplementary Security Income (SSI)
A person's eligibility for these programs is dependent on the amount of resources (property and cash) that the person owns. In determining the amount of resources, both Medicaid and S.S.I. allow a person to exclude prearranged funerals within certain limits.
When making your funding arrangement, you should ask what the impact would be on your funeral arrangement if you ever need to qualify for Medicaid or S.S.l.
Real estate or personal property may, in limited cases, be transferred to a funeral home to pay for a funeral. In these cases, state law will control how this is done. Some state laws prohibit creditors from filing a claim against the trust, life insurance or other property used to fund a funeral.
Impact of Inflation and Installation Payments
The manner in which the funeral is funded will affect the ability of the funeral home to guarantee delivery of the funeral which you planned.
Funeral price inflation has closely matched the rate of general inflation in the U.S. economy. Consequently, it is important for you to know if the money available at the time of death will be sufficient to pay for the cost of the funeral at that time.
Payment can usually be made in a lump sum or paid over time. If an annuity, savings account trust fund isused to fund the funeral, a guaranteed funeral is usually not immediately available to you when installment payments are made. If insurance is used, the funeral may be guaranteed immediately ,or after one or two years depending upon the insurance policy, even though the payments did not equal the cost of the funeral..
If your funeral is not guaranteed, it is important for you to know if the money available at the time of your death will be sufficient to pay for the cost of your funeral.
Cancellation and Relocation
You will usually be given a limited time in which you may cancel your funding arrangement without penalty. After this period of time has passed, the funding arrangement will specify any refund to which you are entitled.
If you move to another state or area not served by the funeral director of funding arrangement, it may also affect the funeral and guarantees. Some states have specific regulations which govern where funeral trust funds may be deposited and how such transfers may be implemented. For example, many states require burial trust funds to be deposited in banks and other financial institutions within that state.
Additionally, the cost of providing the same funeral may vary by geographic location. A different funeral director may not guarantee the same funeral for the same price.
Regardless of the funding arrangement, the following information should be disclosed before you sign any contract, so you fully understand the funding arrangement:
Some FSCAP Suggestions
The Funeral Service Consumer Assistance Program (FSCAP) works with families each weekday in helping resolve problems and complains concerning funeral homes. FSCAP also offers suggestions on how to begin the process of reviewing various types of funeral home or preneed contract "rating" service, FSCAP uses its experience with other families in helping you discover for yourself what's best for you. The assistance and additional resources we suggest you use are intended to make you become a more informed shopper of funeral-related services and merchandise.
Most problems arise through misunderstandings, inability to listen or take notes due to emotional stress, questions not asked, answers not heard or understood, or important consumer obligations not stressed by the seller.
Some of the most important questions to ask before you sit down with a sales counselor, and prior to making any decisions.
In addition, picture yourself, pencil in hand, asking these important questions of the sales counselor:
"More than half the states now require a license or permit to sell these contracts. Does this state? If so, what is your license number?"
"I understand that virtually all states have a controlling agency that regulates the sale of these contracts. What is the name, address and phone of the one in this state?"
"I'm going to listen to your presentation, but just because I'm quiet doesn't mean I understand it all! Can you stop every five minutes to see whether I understand all you've just said, and give me time for questions?"
"Could you explain the difference between the standard professional services fee and other services listed farther down in the contract? What is the reason for the two types of charges?"
"What if we need the services of two funeral homes, one in this state and one out-of-state? Why is there a need for two separate bills?"
"If we change our minds after we sign, what is our time limit to cancel? What if we choose to cancel well after the time limit has expired?"
"We've gone over a great deal of information today, mostly about the funeral. Is there any other vital information I need to know about possible additional charges, documents I'll need, the cemetery purchase, graveside charges or ground/air transportation? Have I asked every question? If I haven't, have you volunteered all the information you need to ensure satisfaction for me and my family?"