While funeral planning is an important aspect of an estate plan, we offer the top five reasons not to enter into a prepayment plan with a funeral home.
While funeral planning and providing for funeral expenses are an important aspect of an estate plan, there are better ways to handle these tasks than entering into a prepayment arrangement with a funeral home or mortuary. Heres why:
1. Although there are several legal controls on how the funeral industry can handle and invest funds for future services, it is best to have your funds within a financial institution that is strictly regulated and has expertise in this industry.
2. Mortuaries and funeral homes can go out of business, and there is no guarantee in most cases that your funds will be returned to you, nor recourse for mismanagement or misappropriation of funds.
3.Often prepayment plans do not provide a method to withdraw the money in a financial emergency, nor to change your plans.
4.There is often no provision for relocation. People move and lives change, prepayment plans do not normally provide a method to choose another location should you move from the area.
5.Money paid now may not account for inflation of the future, leaving survivors to cover the cost difference.
Preplanning for your final arrangement makes good sense, but prepaying for these services does not. This can be addressed within a comprehensive estate plan and there are several way to provide for the expense of your funeral, including a Totten trust, a payable upon death account in which a beneficiary can take control of an account upon the passing of the accountholder, or with a Funeral Trust tied to life insurance.
Explore options and plan carefully to ease the burden of your passing, and seek advice to avoid making an uninformed decision in this sensitive area.
About the Author:
Hammond Law Group is a leading provider of expert estate planning guidance in Colorado Springs, CO. For more information on funeral expenses and other estate planning services, visit our website.
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