A question about pre-paying your funeral costs….read on:
I saw your piece this morning and wanted to ask a serious question about the disposal of my remains. I already have a plot and a stone in place. My kids know. I want to prepay my funeral expenses so that is one less thing they have to do when the time comes. Rapidly approaching 80 and in pretty good health as far as I know but the question I have is as follows: How do I know that if I prepay 15,000 dollars to a funeral home that they will still be in business if I live to a hundred? Who fulfills the contract if they are bought out or go out of business? What should I look for in that contract to assure that I am not only buying a funeral but a problem too?
I think this is an excellent question and gets to my core belief that pre-planning everything regarding your end of life is critical to good planning. I could answer your question myself but I thought it better for you to receive the answer directly from an esteemed member of the funeral home industry. Therefore, I have asked Dan Moloney Jr., President of Moloney Funeral Homes, to answer your question.
So, Dan, how would you answer my client’s question?
DAN MOLONEY’S RESPONSE:
First, it is good to see that you’ve taken care of your burial space and that your family is aware of your wishes. Certainly, pre-planning and prepaying your funeral expenses in advance is also a wise thing to do and relieves your family of difficult decision-making at the time of passing. You should know that New York State is one of the safest states in the country for prepaying a funeral. In New York, the money paid toward a pre-paid funeral contract with a funeral home should be held in a specifically authorized bank plan such as PrePlan NY or Cooperative Funeral Funds. This is an important item to look for on the funeral contract. These entities hold the funds and produce interest. When the time of need arises, all of the money, including interest, is available for the funeral expenses.
There are 2 types of funds. Revocable and Irrevocable. The Revocable funds are 100 percent refundable, including all the interest. The funeral home may not keep any of your money for any reason or charge you a fee for setting up the prearrangement. An Irrevocable fund is usually set up as part of a spend down in order to qualify for Medicaid. If it is irrevocable, the money is not refundable and any unused portion would be returned to the county. That is a whole other conversation. It’s important to know that either of these funds is fully portable, meaning you or your family can decide to use a different funeral home at the time of need and the funeral home that handles the funeral would be able to receive 100 percent of the funds to put toward the funeral.
Whenever a funeral home is sold or goes out of business, it is required to send a letter to every person who has a prepaid funeral with them, informing them of the change. An individual can then decide to move the prearrangement, close it out for a refund, or keep it with the funeral home that purchased the previous funeral home.