Pre-Paid Funeral Contracts

Although funerals are never a fun thing to think about, failure to plan for this inevitability can have negative consequences for you and your family.  When a loved one dies emotions are high.  Financial implications of a funeral are often overlooked.  However, funeral expenses are costly and without a proper plan, family members are often left to shoulder the burden.

Prepaid funeral contracts can be a good way to take some of the burden off of their shoulders.  They can also have some estate planning benefits as well.   Prepaid funeral contracts can protect some of your assets from the cost of long term care.

With a prepaid funeral contract you pay for all of your own funeral and burial or cremation expenses in advance by executing an irrevocable contract with the funeral provide of your choice.   You have the opportunity to make specific choices with regard to the details of your funeral and burial or cremation.  When you pass away, your family notifies the provider and they handle all of the arrangements in accordance with the terms of the contract.

When selecting the provider of these services, you must be careful.  You should ask about the provider’s accounting practices prior to agreeing to a contract.  Funeral providers are required by law to place payments into trusts or insurance policies for safe-keeping.  This doesn’t always happen and an unscrupulous company could try to leave you in the lurch.  You should also get a detailed accounting of exactly what you are paying for and what you expect to receive. Some funeral providers may try to deliver products inferior to those you chose while creating your contract. It is also a good idea to let your family members know about your plans so they can ensure that your wishes are honored.

One estate planning benefit for those that may need MassHealth for help paying for long term nursing home care is that prepaid funeral contracts are not considered countable assets. These contracts are irrevocable so Masshealth does not consider the funds available to you.  Prepaid funeral contracts are a great option for those who need to spend down assets to qualify for nursing home benefits.   For example, if you need to apply for nursing home benefits, you can only have $2,000 in your name while your spouse can have only $120,900 (2017 figure).  If you have more assets than Masshealth allows, using some of the excess funds to pay for future funeral expenses is a wise investment.  You are able to make your wishes known and you can spare your family the burden of having to plan and pay for funeral arrangements.