You finance your education, your house, your car, your vacations, your children’s education and everything that you put on credit cards – but did you ever think about financing your funeral? It really is no different.
End of life, death, and post death planning is one of the most important things you can do when you are alive. There is no escaping that you will die. It is an uncomfortable and taboo conversation to many. However, it is a reality and the truth is that when the inevitable happens everything will be much better for your loved ones if you have a plan in place. This plan ideally details the decisions that you have made around how you would like to have your body treated and what type of funeral you would like. In the perfect world you have pre-planned, and paid, for everything.
Funerals and burial can be expensive, and the more detailed you are in your planning, the more the incremental cost structure will vary. However, it is safe to say that each year the costs of these services are rising and today you can safely ballpark the average funeral costing in the range of $8000-12,000 dollars. Some of this is geographically driven and some of the costs are real and hard. We know that the cost goes up every year, with an anticipated inflationary rise of over 4-5 percent a year, such that by 2035 the average funeral price will have doubled. Plot costs are in addition to this, and depending on the cemetery can range from $3,000-$20,000 in New York and New Jersey.
Most funeral and cemetery service companies will lock in a rate now if you pay for your future needs. Wealth advisors like Kiplinger, recommend going this route as a ‘convenient and reassuring way to spare your family some measure of emotional stress when the time comes (because) the big decisions about your funeral will have been made, the money paid, and that will be that.’ There are a number of options available to you that can help with your planning. At CMS Mid-Atlantic we can walk you through all of the alternatives available to make this work. And rest assured that in New York and New Jersey you, the consumer, are protected by the law when you make these arrangements.
Medicaid Benefit of Prepaying for a Funeral
When you apply for medicaid, you can only have so many assets. It is allowable for the sake of the application to spend down those assets. A financial advisor can give detailed advice on the best way to handle your finances now and for the future, and can help you set up an estate plan, but you should realize that prepaying for funeral expenses is one way to do this. And it works for both spouses in the case of marriage. This requires that the cost of the funeral and burial are put into an irrevocable trust. The funds that are deposited cannot be touched or disbursed until the time of death. The funds in the trust are then no longer considered part of what must be spent down. CMS Mid-Atlantic can guide you on how to make those plans and set up the trust.
Financial Planning and Trust Implements
Even if you are not going through the estate planning process of a medicaid spend-down plan, you can still make arrangements to prepay for a funeral. In New York, 100% of the funds are required to be put into a trust, with rights for a full refund, with interest when you purchase a revocable plan and all irrevocable plans are transferable. New Jersey has consumer protections as well. (Source). When setting up the trust you will want to simultaneously plan your funeral. Not to worry, this can be done in a way that allows for some flexibility if you want to add or change a detail later.
One way to prepay for your funeral is to purchase an insurance policy and make the funeral home the beneficiary of that plan. There are a significant number of insurance companies that offer policies like this and it is an easy way to ensure that your funeral and burial costs are covered so that your loved ones are not burdened in the future.If you go this route, one of the things to be careful about is to make sure that your insurance policy is large enough to cover all of the real costs for both funeral and burial. Making decisions now about your final wishes will help guide an understanding and projection of those costs. Looking at life expectancy against the inflation rates for the details and services you want to make sure are covered is an important part of the planning that you should do before committing to a policy.
At CMS Mid-Atlantic we can help you work through all of these details, the planning, and advise you on the best financial options available to make sure that you are providing peace of mind and not burdening your loved ones with the difficulties of financial decisions. There is no better gift to give them.