Preplanning a Funeral – A Loving Gift
Preplanning a Funeral: A Loving Gift
By Robyn Michele Haberman
- Preplanning a funeral is one of the most important decisions you will make in your lifetime. Thousands of New Yorkers are choosing to pre-plan, recognizing that it is smart financial planning and provides great emotional relief for family and friends. Preplanning your funeral allows you to make your own plans and spares surviving loved ones from the emotional burden of making decisions during a difficult time.
- Preplanning allows individuals the opportunity to make personal and specific selections for the funeral service that most closely meets their needs, and prevents loved ones from having to second-guess the wishes of the deceased at the time of need.
- Many people choose not only to pre-plan a funeral, but to prefund it as well. More than any other state, consumers in New York who prefund their funerals have their money protected by what are truly the strongest laws in the nation.
- Prefunding a funeral places the cost at today’s prices in an investment vehicle, so that the interest earned will keep pace with inflation to cover the cost of the funeral (at future prices) when the death occurs. The funds in a preneed account belong to the purchaser, who may change their selection of funeral homes or arrangements at any time. The funeral director must deposit the funds in a financial institution or trust in a U.S. government-backed investment within 10 business days. In New York State, a funeral director cannot charge any fee for prearranging a funeral.
- Consumers frequently ask, “What happens if the funeral home closes” Remember, the purchaser remains in control of those funds at all times. In the event a funeral home closes, all accountholders will be notified in writing within 30 days. They may choose to transfer the funds in their preneed account to another funeral home or, if it is a revocable agreement, request a refund of their deposits plus interest earned.
- Medicaid/SSI applicants may set aside funds for the sole purpose of paying their funeral/burial expenses as part of the spend-down process to Medicaid/SSI eligibility. These funds will not be counted as part of the individual’s financial resources and must be placed in an irrevocable trust. A trust titled ‘irrevocable’ means that any refund or withdrawal will be refused by the funeral director and/or funeral trust or financial institution. The funds may only be used for funeral and burial expenses.
- An applicant/recipient of Medicaid/SSI may also set aside funds in irrevocable funeral trust accounts for immediate family members. Any funds left over in an irrevocable trust after the funeral and burial charges have been paid will go to the county where the decedent resided.
- Before visiting a funeral director to make arrangements, think about your preferences for a funeral service and bring a list with you. The funeral director will provide printed information with the cost of each item, and help you to choose an appropriate and dignified service.
New York State Funeral Directors Association, headquartered in Albany, NY offers a list of member funeral homes at www.nysfda.org.
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