Paying for Funeral Costs
There are numerous methods for paying for a funeral, with new options such as crowdfunding gaining popularity. This is a particularly useful tool in emergencies. Even with new tools, however, the best way to ensure you get the funeral you want is to use conventional methods such as:
Funeral Insurance: Purchasing funeral insurance to cover your funeral expenses is a smart decision, but before buying, it is advised to conduct some research.
Preneed Funeral Contracts: A preneed contract is negotiated with a funeral home, a cemetery, or both. You decide what to include in the agreement and how to pay for it collaboratively. You can contract for only cemetery property and services, only funeral services, or both. The important thing to remember about preneed contracts is that you should be sure of what you are purchasing and the terms.
Pre-Paying Funeral Costs: You make specific choices when entering into a preneed contract with a funeral home or cemetery. You can pay for it ahead of time. The main advantage of prepayment is that you lock in today's prices.
Direct Savings: Putting money aside in a traditional account is a simple option for many people. The risk is that it is challenging to ensure that the money is spent correctly. Following your death, your survivors will require immediate access to these funds. Contact your financial advisor to ensure that the account is set up so that only people you trust can withdraw funds.
Funeral Trusts: A funeral trust is almost the same as a regular savings account, except the funds are legally designated for funeral expenses. Any money remaining after the funeral can be given to your estate. Funeral trust regulations differ from state to state, so consult with your attorney or banker to ensure the trust is properly set up. Many funeral homes can also assist you in establishing a Funeral Trust.
Public Assistance: Federal, state, and local programs assist with funeral costs. For example, Social Security provides a one-time death benefit of $255 to eligible individuals, and the Veterans Administration also offers funeral benefits. Many counties have programs to assist people with limited financial resources with funeral expenses.