It is a good idea to look around for affordable funeral services, especially that the costs for a funeral have been increasing. But be careful about certain funeral costs that may be required to be paid in advance, or what is called prepayments.
You may read below some important considerations when it comes to funeral expenses and especially prepayment plans.
Funeral Prepayment Problems
What could be worse that not having the services you need at a time when you and your family are grieving. Many people opt to purchase funeral services beforehand in preparation for the inevitable, and to save their loved ones the hassle of dealing with funeral arrangements during a difficult time.
However, what happens when the funeral home or service provider goes bankrupt through mismanagement, misuse, or theft? If this happens to a funeral home and you have already prepaid, you may never get your money back. If you prepay for services from one city, you may realize later that it cannot be refunded nor transferred, or you may need to pay a large penalty for withdrawing your payment. You also have to take into consideration the likelihood that land prices will increase. If this happens, your loved ones will be left to foot a bill that they may not be able to afford.
Options to Prepaying for Your Funeral
20% of people over the age of 50 have prepaid their funeral, whether in full or partial, as stated by the U.S. News and World Report. They reasoned that they don’t want to put any more burden on their family during such a difficult time.
Other than prepaying for funeral services, there are other options you can consider in order to set aside payment for your funeral. Consider setting up a Totten trust with your bank and specify that this will be used for your funeral expenses or any other expenses you may want after your passing.
Setting up a trust like this will allow you to substantially cut the risk of losing your money to the funeral home. You also do not need to move the money from one city to another in case you plan to move. Your money is usually more secure in banks. Plus, depending on how the trust is set up, you may still maintain control of your money during your lifetime.