Pre-Need

Pre-planning is increasingly common, as more and more people plan for their own funerals. Funeral planning is now viewed as an extension of estate planning; people state their preferences and sometimes even pay in advance. Thinking ahead typically results in clearer and more thoughtful decisions.

Planning

Planning ahead allows you to choose the specific services and products you want and saves your loved ones the difficulty of making these decisions in a hurry and under stress.

Pre-need arrangements can be made directly with a funeral provider or through a funeral planning or memorial society (a nonprofit that gives information about funerals and disposition but doesn’t offer funeral services themselves). Some funeral homes have the word “society” in their names, but that doesn’t necessarily indicate a nonprofit, so it’s best to ask.

You may choose to make funeral arrangements in advance but not pay for them in advance. There is some risk to this because prices may go up or businesses close or change ownership. On the other hand, prices could go down.

Even if you do not choose to pre-plan the funeral, deciding where your remains will be buried or entombed and purchasing a plot in advance can relieve family members of the pressure of finding and buying a plot in a hurry.

If you make pre-need arrangements, make sure the arrangements are in writing. Give a copy to family members and to your attorney and keep a copy in an accessible place. Just putting the information in your will is not helpful because wills are often not found or read until after the funeral. Similarly, safe deposit boxes shouldn’t be the only location for the documents because arrangements may need to be made before family members can get into the box. It’s a good idea to review these arrangements every few years.

Prepaying

Laws about prepayment vary state to state, so it’s important to find out the regulations in your state. Some states require the funeral provider to put a portion of the prepayment in a state-regulated trust or to purchase a life insurance policy with the death benefits assigned to the provider. But other states offer no protection to ensure that advance payments are available to pay for the funeral when they are needed.

Things to consider when you pay for pre-need arrangements:

• What are you paying for? What merchandise and/or services are included?  Are you paying for goods, like a casket, or just services?
• What happens to your prepaid money? How is it held?
• What happens to interest income on prepaid money?
• What protection is there if the company goes out of business or changes hands?
• Can you cancel the contract and get a full refund?
• What happens if you move or die away from home? Can plans be transferred and, if so, is there added cost to transfer the plans?

Even if you choose not to make formal pre-need arrangements, your family and trusted advisors, such as attorneys, need to know your preferences so they can make sure your wishes are followed. Discussing this before the need arises can relieve anxiety about honoring your desires when the time comes.