In our last post, we began discussing funeral planning, an important aspect of estate planning. We left off by saying that it is important to set aside money for your funeral. One common approach is to set up a trust through a funeral home. Usually, there are no limits to the amount of money that can be placed in such trusts, but there may be limitations if the money is being set aside in order to qualify for Medicaid.
Aside from the costs of the funeral service itself, the trust money can be used to pay for other items like flowers or cemetery plots, though this will depend on the state. What is left over is then typically given back to the family of the deceased. Next to consider is what funeral home to go with.
Because funeral costs vary a lot from place to place, it is important to shop around. On average, funerals cost about $6,500 back in 2009, not including cemetery costs. The latter can often add several thousand more dollars to costs.
One thing to be aware of is that funeral directors must provide an itemized list of services and allow customers to select what they wish. Depending on the method selected for disposition of the body, whether there will be visitation and a funeral service, all affect the cost. The most important thing is to plan ahead and determine what is within your budget, and stick to that.
Planning is important, as things can be stressful when a loved one dies. In the event no funeral plans have been made prior to death, there will have to be conversation among family members and determination of the wishes of the deceased loved one. This may be a relatively easy process for some families, but quite difficult for others.
All in all, it is much better to have at least a rough outline or listing of your funeral wishes and plans. Doing this as part of your estate plan is natural and smart.
Source: Associated Press, “Funeral planning can save money, heartache,” Tom Murphy, December 7, 2011.