By John Drachman
Looking for something new to do while sheltering in place? Whether you are 40 or 100 today could be the perfect time to start planning your own funeral. A relief to your loved ones as well as yourself, such an effort involves two courses of action:
- Planning funeral arrangements are best done years in advance. This way you can line up the type of service you want, music preferences and other personal choices. Plan it right down to the guest list if you want. This will let your family put your ideas into action with the confidence of knowing they’re acting according to your last wishes.
- Prepaid funeral plans involve all of the logistics connected with paying for your funeral. Costs could include a casket or cremation, the service, the headstone and obituary information.
The tab for a funeral is best not left for your family and friends to pick up. The average price of a burial with vault is about $8,000, according to the National Funeral Directors Association. That means some robust comparison shopping will be required. Popular options include:
- Whole-life policy. In this situation, your beneficiary receives the payout for the funeral arrangements. The rules here vary by state; some require a funeral home director to be named the beneficiary.
- Burial insurance. This policy covers the cost of all expenses. The beneficiary has control of how the death benefit is used.
- Revocable trust. Here you will often sign a contract to pay for your funeral in installments. The funeral director deposits your payments into an interest-bearing account. When you die, the trustee you designate uses the assets to pay for your funeral.
- Irrevocable trust. Much like a revocable trust, you create a plan that makes direct payments to a funeral director. In contrast to the revocable trust, this trust can’t be changed.
However, there are a number of reasons not to pre-pay your funeral expenses. Like any enterprises, funeral homes can go out of business. Insurance policy death benefits may wind up being less than the premiums you paid. If you pass away too early over the term of the policy, your insurance company may not pay anything.
Instead, consider setting up a payable-on-death account through your bank. Since this method works just like a regular bank account; make deposits as often as you would like. The money can gain interest income over time –and you don’t have to name a funeral director as beneficiary.
The Bottom Line
While “it’s your funeral” you’re planning, you don’t have to undertake this alone. Many individuals include such planning and payment arrangements as part of an estate planning strategy they developed with a wealth manager, attorney or Certified Financial Planner™. Many financial professionals are trained and licensed to quarterback such efforts as part of any number of end-of-life scenarios that might involve long-term care, estate taxes or developing a will. By planning now, you offer greater relief to your loved ones later.
John Drachman is a contributing writer MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. John is an IABC award-winning writer, who applies his 30 years of financial marketing experience toward advancing the dialog between investors and investment professionals.