Take Back Your Finances #33: The Undesired Discussion – Funeral Arrangements (And Is It A Good Idea To Pre-Pay?)

We have to be honest – this is probably the #1 least favorite task in our 52-Week Take Back Your Finances Challenge, even more so than talking about life insurances and Last Wills and Testaments.

In fact, none of the above topics are fun to talk about, think about and deal with, but especially when you are talking about funeral arrangements, which is the next topic. It’s a gut-wrenching, emotion grabbing, endorphin sapping topic.

BUT…just like we have said all along the process of getting our estates and finances in order, it is necessary to do these things and have a plan of some sort for these things.  The only encouragement we can make to you at this point is that after this week’s challenge, the worst will be over.

In fact, a few years ago, I received a phone call from my mom that was different in tone and seriousness than our other often daily phone calls – she said we needed to discuss her and dad’s funeral wishes. I remember thinking, “Why?  I DON’T want to talk about this because I DON’T want to think about it!” And although at the moment I felt this way, after we had discussed it, we could all breathe easier.  It was actually very relieving. I felt as though when my parents do die, I can spend more time grieving and mourning instead of dealing with every last detail of the funeral. We have the document with their wishes stowed away and hopefully not needed for a very long time.

This week’s task is going to be dealing with funeral arrangements for you and your family.  This is a VERY personal topic and one that has many facets and possibilities.  There are many things to consider when discussing and making funeral arrangements. Many of these decisions are going to be based on the time of life you are in, although it needs to be discussed at any time.  We do not know the day nor hour of our deaths, only the Lord knows. But we all hope and pray that it is our children, grandchildren and even our great-grandchildren that will be responsible for the final details and not the other way around. But we just never know.  So no matter where you are at in life, we encourage you to discuss a plan with your family.

Again, this is where you can get super specific and technical, ranging from a simple discussion of final wishes like where to be buried if something were to happen in the next few years (or even when you are very old) to pre-paying for the whole funeral.  Perhaps other ideas, wishes, requests, etc.  Again, we are not going to tell you what to discuss, what you should do or what your wishes should be.  This is a very personal topic. We are simply asking you to take time this week to discuss your wishes with your loved ones and vice versa.  If you want, you can put it in writing so that it is understood and remembered. Just make sure that you give a copy to your loved ones and that it is not written in your Last Will and Testament.  It is important that these wishes are separate from your Last Will and Testament because unfortunately, these are often not read, found or addressed until after the funeral when it is too late. It needs to be a separate document for all.

Also, note that when it comes to where the money should come from for paying for the funeral, this is where some of that life insurance comes in unless you’ve set up separate arrangements, This needs to be known and discussed as well since the average funeral is $8,000-$10,000 today. This is the only reason why we have term life insurance on each of our children in the amount of $10,000 – it is specifically to cover a funeral, which we hope and pray that we never have to claim it. As the parents, our policies are much more to yes, cover the funeral as a portion of that total amount.

It is also important to discuss this with those outside of your immediate household. If something were to happen to your entire household, or even with the adults/parents of the house, this is not something that the kids alone (or even at all depending on age) should be held responsible for sharing with the other adults or family members that can carry out the wishes.  The loved ones you contact could be your own parents if they are still alive, siblings, other relatives, close friends, etc. Just consider whoever you feel should be a part of the discussion and/or have a copy of the final wishes.

Now one idea regarding funerals that is a popular one is a topic that we also want you to seriously research before diving in – the topic of pre-paying for a funeral. Often, the PROS of this are discussed, but not so much the CONS.

First, many popular pros (some myths as it depends on your specific arrangements):

• Get today’s prices
• It’s completed and done so your family does not have to take care of this
• It can be forgotten and have peace of mind that it is all done and paid for
• You can get the exact wishes you have down to every last detail

And some of these can be true and fair, but this is not all that it is cracked up to be.

Many financial experts are opposed to pre-paying for your own funeral. The reasons are very much the same across the board. First, many funeral homes will just take a life insurance policy out in your name and name themselves as the beneficiary. Second, if they don’t go the life insurance route, it often goes into a bank account and accumulates interest on their behalf. Also, it really may not cover all that you think it is going to cover.  This is not even to mention what your future consists of as well – depending on your situation if you pre-pay for a funeral but years later move across the country due to a job transfer or other reason, will you really want to use the pre-paid plot/services that are thousands of miles away?

We are not saying to not pre-pay, we are just saying to research it and ask the questions that the FTC has shared as examples: 

• What are you are paying for? Are you buying only merchandise, like a casket and vault, or are you purchasing funeral services as well?
• What happens to the money you’ve prepaid? States have different requirements for handling funds paid for prearranged funeral services.
• What happens to the interest income on money that is prepaid and put into a trust account?
• Are you protected if the firm you dealt with goes out of business?
• Can you cancel the contract and get a full refund if you change your mind?
• What happens if you move to a different area or die while away from home? Some prepaid funeral plans can be transferred, but often at an added cost.

For additional articles on the topic of pre-paying for your own funeral, read the following articles in your quest to research this topic.  This could be a better idea much later in life rather than earlier if you are considering pre-paying.

• Kiplinger.com on Should You Prepay Your Funeral
• Money.usnews.com on Should You Prepay Your Own Funeral Expenses
• Dave Ramsey on Facing the Funeral Before You Have To

Ok, just get this task done and then you don’t have to think about it again for a long while.  That’s the way we look at it. 😉

One final thing…we also have a Facebook Group where you can engage in discussions, receive encouragement and talk to others that are participating in the challenges too for more ideas! Head to the Be Intentional with The Thrifty Couple Facebook Page HERE and ask to join us there! You can also invite friends and spouses too!

Disclaimer: We are not licensed financial planners nor are we attorneys. We are only a couple that have been just a hair-breadth away from bankruptcy and found our way out of debt with a goal to now help others. Please make sure to consider any advice given on our site and in this challenge as tips we have used ourselves; they may not work for everyone. If you have questions please make sure to contact a licensed professional.