By Susan Johnston for US News and World Reports
They say the only certainties in life are death and taxes. Uncle Sam withholds money for taxes, but there's no forced savings for a funeral. Most people don't give it much thought until they're grieving the loss of a loved one – a time when heightened emotions don't always lend themselves to sound financial decisions. In fact, a National Foundation for Credit Counseling poll last year found that 83 percent of the 949 respondents were either not prepared for the financial responsibilities of a funeral or had no idea what a funeral actually costs. (For a traditional funeral and burial, those costs can run into the tens of thousands of dollars.) Death and funerals are taboo topics but ones worth learning about, says Mike Boyd, a former funeral director who founded the website AskTheFuneralExpert.com. "Funeral homes can capitalize on a family member's unfamiliarity with the products they're purchasing," he says. "Odds are, they will make funeral arrangements one to three times per lifetime, so consumers should become as educated as possible." While this may not be the most uplifting information, here's a look at steps people can take to plan for their funeral as well as money-saving options for their survivors.
Preplan (but don't necessarily prepay).
Many people count on their survivors using proceeds from their life insurance policy to fund their burial costs. But funeral homes typically require immediate payment, and the insurer may not be able to process claims that quickly. Having funds more readily available for your survivors could prevent timing issues. Some funeral homes allow you to create a preneed trust where they lock in the current prices so you can fund funeral plans in advance. Cornerstone Funeral Services & Cremation in Boring, Oregon, is among them. "At the time of need, your preneed trust funds will pay for your funeral, cemetery or cremation service, per the preneed contract you arranged to cover the specific arrangements you authorized," explains Elizabeth Fournier, owner of Cornerstone Funeral Services. Essentially, it works like an installment loan with no interest charged. If you die before the loan is paid off, your survivors would pay the difference. Locking in today’s prices may seem appealing, but state consumer protection varies if, for instance, you move out of state, change your mind about arrangements or the funeral home goes out of business. That's why Joshua Slocum, executive director of the nonprofit Funeral Consumers Alliance, recommends preplanning your funeral (talking to local funeral homes to get an idea of pricing and options), but not prepaying for it. However, if a person is spending down his or her assets to qualify for Medicaid, he adds, prepaying for a funeral may make sense because those funds don't count against eligibility. For anyone considering prepayment options, check your state laws and make sure you understand the terms of your contract.
Consider alternatives to a traditional burial.
The casket is often the priciest part of a traditional burial, but you don't have to use a pricey casket provided by the funeral home. In some cases, survivors can save money by renting a fancy casket for the viewing and replacing it with a cheaper one for the burial. Or they could purchase a casket from a warehouse club or a local carpenter if preferred. Scheduling a single rather than a multiday viewing could also save money. Personal or religious beliefs may demand a burial, but there are less expensive options available such as cremation. Since it doesn't require embalming and a casket or burial vault, cremation can cost $500 to $2,000, while traditional burials cost upwards of $2,000, according to Fournier. You could also choose anatomical donation for research purposes. In this case, a medical school or other organization will typically incur reasonable costs of transporting a body to a facility. Still, Boyd recommends creating a back-up plan for your survivors in case you die far away, the organization is not accepting cadavers at the time of your death or the remains are not in acceptable condition (due to, say, a fire or car accident). If you're interested in donating your remains to science, Boyd suggests checking with a local medical school or hospital for referrals so you can set it up in advance – and tell your family members so it won't surprise them. Know your rights if you're a veteran. The U.S. Department of Veterans Affairs provides some financial help with burials for the survivors of veterans. For a death unrelated to service, the burial allowance is $300 (plus a $700 plot-internment allowance if not buried in a VA national cemetery), and for a death connected to military service, the allowance is $2,000. If you're a veteran, make sure your family members know they may be entitled to this benefit.
One of the biggest financial pitfalls in funeral planning is simply choosing the nearest funeral home instead of comparison shopping, according to Rachel Zeldin, founder of funeral planning website Funerals360 (formerly ImSorrytoHear.com). "If consumers just took a couple of minutes and had comparables, they would be in a better position to negotiate and see that there's a huge cost difference between funeral providers," she says. By law, funeral homes must have a document called a general price list, which can include packages in addition to a la carte options. Zeldin encourages consumers to focus on the individual services they want rather than packages to get a true apples-to-apples comparison. "You have a right to call up and ask for it on an a la carte basis rather than package pricing," she stresses.
Depending on the rules in your state, you may even be able to perform some tasks yourself and use a funeral director to supervise instead of paying the funeral home to perform all of those tasks. "In the state of Oregon and Washington, you can act as your own funeral provider and provide your own transportation or dress your loved one yourself," Fournier says. "People do shortcuts all the time."