Most people would rather not think about their own deaths, but unless medical science can somehow come up with an immortality pill, we all have to go sometime. Given that uncomfortable reality, some individuals actually face their inevitable departure with a good deal of planning, such as lining up pallbearers, selecting funeral music, designing their own gravestones, and so on. A number of people even compose their own obituaries.
In many ways, all of that planning can be a good thing. Making funeral arrangements in advance of the event means the deceased’s loved ones and heirs will not have to work out the details when the time comes – which generally is a stressful and complicated period already. It helps to have your final wishes known beforehand, and preferably written down.
Unfortunately, there are opportunistic individuals who prey on those who make their final plans in advance. One specific example is prepaid burial deals or prepaid funeral plans. Countless susceptible families sadly have fallen victim to these unscrupulous operators.
Potential risks of preplanned funerals
According to the Federal Trade Commission, millions of Americans have entered into contracts to prepay their funeral expenses, but in many instances, the money that was supposedly set aside is insufficient to cover the ultimate burial costs, or in the worst cases, gone altogether. Some states have laws to help ensure that a client’s advance payments will be available when they are needed, but since those protections vary from state to state, scam artists can find ways to take advantage of weaknesses in the systems.
In 2013, the FBI finally caught up with a Missouri company which had created an elaborate, multi-layered prepaid funeral scheme which victimized almost 100,000 customers in 16 states, according to Springfield News-Leader. The business was established in 1992, and by the time the law shut them down, their extensive scam had caused more than $450 million in losses for their clients. The operators of the business became very wealthy by accepting large fees and making big promises, but then providing less-than-agreed-to or totally nonexistent death benefits at payout time.
So be careful. AARP offers advice to help senior adults make clear, informed decisions about prepaid funeral or burials.
Consider alternative approaches
It is important to note that there are also honest prepaid funeral services, which genuinely want to ease the burden on their clients’ families. Yet even then, experts warn prospective customers to be wary of the terms, conditions, and “fine print” involved in any contracts. For example, some people’s families were hit with unexpected additional costs when the client in question died in a different state.
Even if the prepaid funeral service you choose is legitimate, entering such a contract may not be the wisest use of your money.
Citing comments from the Funeral Consumers Alliance, AARP notes that some prepaid plans actually can end up costing a customer more in payments over time than the amount of the actual funeral. Furthermore, any interest earned on a customer’s payments typically will go to the company and not the client. The Funeral Consumers Alliance offers a wide selection of informational resources and related links.
Discuss your options with a reputable planning expert
Making funeral plans in advance always is a good idea, and there are smart ways to help you cover the eventual costs. Many experienced advisors suggest investing sufficient funds into a “payable-on-death” bank account or another similar type of trust. Having the needed money set aside in a secure account – with a designated beneficiary – ensures that your funeral expenses will be paid. You also avoid the risk of those funds going to probate. Furthermore, such an approach gives you more flexibility in case you change your mind later about your final arrangements, which is not easily done when you have a prepaid funeral plan.
The knowledgeable elder law attorneys at Cordell Planning Partners will provide insightful guidance to help you understand your options. They can design a comprehensive estate plan which addresses all of your later-in-life concerns, and with smart legal strategies such as Power of Attorney, health directives, wills, trusts, and more, they provide the peace of mind, knowing that your personal wishes regarding your assets and last requests will be carried out.
Cordell Planning Partners offers complimentary educational workshops where they explain a range of estate planning strategies and other critical legal steps, all in terms that are easy to understand.
To learn more, contact us about a free one-hour initial consultation to discuss your individual needs.