THE EVERETT ADVOCATE – FRIDAY, APRIL 30, 2021 Page 17 BY JIM MILLER Should You Prepay Your Funeral? Dear Savvy Senior, My wife and I have been thinking about preplanning our funerals now so our kids won’t have to later, but we would like to fi nd out if it’s a good idea to prepay. What can you tell us? Living on a Budget Dear Living, Planning your funerals in advance is defi nitely a smart move. Not only does it give you and your wife time to make a thoughtful decision on the type of service you want, it also allows you to shop around to fi nd a good funeral provider, and it will spare your family members the burden of making these decisions at an emotional time. But preplanning a funeral doesn’t mean you have to prepay too. In fact, the Funeral Consumer Alliance, a national nonprofi t funeral consumer protection organization, doesn’t recommend it unless you need to spend down your fi nancial resources so you can qualify for Medicaid. Here’s what you should know. Preneed Arrangements Most funeral homes today off er what is known as “preneed plans,” which allow you to prearrange for the type of funeral services you want and prepay with a lump sum or through installments. The funeral home either puts your money in a trust fund with the payout triggered by your death or buys an insurance policy naming itself as the benefi ciary. If you’re interested in this route, make sure you’re being guaranteed the services you specify at the contracted price. Some contracts call for additional payments for fi nal expense funding, which means that if the funeral home’s charges increase between the time you sign up and the time you sign off , somebody will have to pay the diff erence. Here are some additional questions you should ask before committing: Can you cancel the contract and get a full refund if you change your mind? Will your money earn interest? If so, how much? Who gets it? If there is an insurance policy involved, is there a waiting period before it takes effect? How long? Are the prices locked in or will an additional payment be required at the time of death? Are you protected if the funeral home goes out of business or if it’s bought out by another company? What happens if you move? Can the plan be transferred to another funeral home in a diff erent state? If there’s money left over after your funeral, will your heirs get it, or does the home keep it? If you decide to prepay, be sure to get all the details of the agreement in writing and give copies to your family so they know what’s expected. If your family isn’t aware that you’ve made plans, your wishes may not be carried out. And if family members don’t know that you’ve prepaid the funeral costs, they could end up paying for the same arrangements. Other Payment Option While prepaying your funerals may seem like a convenient way to go, from a fi nancial point of view, there are better options available. For example, if you have a life insurance policy, many policies will pay a lump sum when you die to your benefi ciaries to be used for your funeral expenses. The payment is made soon after you die and doesn’t have to go through probate. Or you could set up a payable-on-death (or POD) account at your bank or credit union, naming the person you want to handle your arrangements as the benefi ciary. POD accounts also are called Totten Trusts. With this type of account, you maintain control of your money, so you can tap the funds in an emergency, collect the interest and change the benefi ciary. When you die, your beneficiary collects the balance without the delay of probate. Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.
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