While you cannot completely shield your loved ones from the emotional impact of your death, you can reduce their burden by including a funeral planning component in your comprehensive estate plan. As part of that plan, you may have considered pre-paying for your funeral and burial through a contract with a local funeral home. Although this option may seem like a good way to ease the burden on your loved ones, it is important to understand the potential drawbacks. Toward that end, the Los Angeles attorneys at Schomer Estate & Wealth Advisors discuss whether a pre-paid funeral contract is a good idea.
What Is a Pre-Paid Funeral Plan?
When a loved one passes away, emotions often run high, and decision-making can be especially difficult during this time. This emotional turmoil makes it easy to see how conflicts can arise when important decisions must be made just days, or even hours, after a loss. Planning a funeral involves a myriad of decisions, each of which can add to the stress and anxiety of the situation. Some of the decisions that must be made include:
- Arranging for the disposition of the body, whether through burial or cremation.
- Choosing products such as the casket, urn, or grave marker.
- Deciding whether to have an open or closed casket during the service.
- Planning the details of the funeral service, including selecting readings, music, and speakers.
- Choosing an officiant to lead the service and offer words of comfort.
- Making logistical decisions, such as setting the date and time of the service and notifying attendees.
Along with the emotional impact of your death, your loved ones will also face significant financial responsibilities if you have not already taken care of the costs associated with your funeral and burial. As of 2024, the average cost of a basic funeral exceeds $10,000, and that figure can rise substantially with the addition of extras like flowers, music, and catering. Grieving survivors often end up spending more than necessary if they are forced to make these decisions under duress, just days after suffering a loss.
Why Might a Pre-Paid Funeral Contract Not Be a Good Idea?
Pre-planning your funeral and burial is undoubtedly one of the best ways to limit the stress and anxiety your loved ones will experience after your death. However, signing a pre-paid funeral contract may not be the best method for doing so. Several potential issues can arise with pre-paid funeral plans that may make them less appealing than they initially appear:
- Difficulty in making changes: Pre-paid funeral contracts typically lock in all the details as of the date you sign the contract. While one of the incentives for pre-paying is the ability to lock in today’s prices, you are also locking in all the details of your funeral. If you later decide that you want something different—such as opting for cremation instead of burial or choosing to be buried next to a new spouse after remarrying—you may find that it is difficult, if not impossible, to modify the terms of the contract.
- Uncertainty about your future location: Although you might plan to remain in your current location, a new marriage, the birth of grandchildren, or health issues could lead you to move to another city or state. If you have pre-paid for your funeral with a local funeral home, this move could render your funeral plan worthless, as your pre-paid arrangements may not be transferable to a funeral home in your new location.
- The risk of the funeral home going out of business: Funeral homes can and do go out of business — they are not immune to the financial difficulties that can affect any business. If the funeral home goes out of business or files for bankruptcy, your pre-paid plan could be rendered useless, and your loved ones might be left scrambling to make other arrangements.
Is a Funeral Trust a Better Option?
Given the potential pitfalls of a pre-paid funeral plan, you may be wondering if there is a better alternative. One option to consider is creating a funeral trust. A funeral trust allows you to set aside funds specifically for your funeral and burial expenses while giving you more flexibility and control over the details. Unlike a pre-paid funeral plan, a funeral trust does not lock you into a contract with a specific funeral home. Instead, the funds are held in trust and can be used at any funeral home, regardless of where you live at the time of your death.
With a funeral trust, you can also appoint someone to oversee the arrangements, ensuring that your wishes are carried out according to your specifications. This can include making legally binding decisions about how your body will be handled, as well as the details of the service itself. By setting up a funeral trust, you can provide peace of mind for your loved ones, knowing that your wishes will be honored and that they will not have to bear the financial burden of your final arrangements.
Do You Have Additional Questions about Including a Pre-Paid Funeral Contract in Your Estate Plan?
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about the pros and cons of a pre-paid funeral contract, contact the experienced Los Angeles estate planning attorneys at Schomer Estate & Wealth Advisorsby calling (310) 337-7696 to schedule an appointment.
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