Planning Ahead for Funeral Expenses

Compare funeral services and options, especially if there is adequate “notice,” such as a long illness, or an impending death. Funerals are often a family’s third or fourth largest purchase after a house, college, and a car. Consider the following:

• As crass or unseemly as it might sound, the “Rule of Three”—comparing at least three different service providers—should be applied to funeral homes, as well as any other product or service. For additional background information, visit www.funerals.org.
• The average cost of a funeral in 2004 was $5,200, but costs can range from $2,000 to $10,000 or more, depending on the services selected. The cost of a casket is often the single largest item.
• Experts advise bringing along someone who isn’t grieving when visiting service providers because they are less likely to make decisions based on emotions. For example, some people may have feelings of guilt or a fear of appearing “stingy” and try to compensate with an elaborate funeral.
• By federal law, funeral directors must provide an itemized list of prices, in person or over the phone, upon request. Consumers have the right to select the products and services they want without being required to buy a bundled package of pre-selected items.
• AARP and Consumer Reports magazine generally recommend steering clear of prepaid funerals because they can be expensive and difficult to get money back out of (if people change their mind or move, for example). Instead, they suggest buying a small life insurance policy to cover funeral expenses or earmarking a sum of money in a financial account. An exception is when someone is in the process of spending down their assets to qualify for payment of long-term care expenses by Medicaid. In this situation, dollars spent on a prepaid funeral are not counted as a household asset.
• Another funeral-related issue is deciding where someone gets buried when they’ve been remarried one or more times. As noted in a 2003 Wall Street Journal article, “The kids often want to reunite mom and dad in death, but the surviving stepparent has other ideas.” The article notes that it is never too early to discuss burial arrangements with loved ones and/or put preferences in writing so others are aware of them, especially if family relationships are complicated.