Save loved ones money and heartache by prepaying for funeral expenses

Wayne Bright, funeral director at Wilson Funeral Home, arranges flowers on a casket before a service Thursday, Sept. 2, 2021, in Tampa, Fla. (AP Photo/Chris O'Meara)

You won’t be around to see this kind of investment pay off.

But experts say paying for your own funeral in advance can save loved ones money and heartache.

“There’s a lot of expense associated with dying and a lot of time associated with dying — not for the dying person, but for the family that’s left behind,” said Mallory McGrath, whose firm Viive Planning helps clients navigate old age and death.

When there’s not a plan in place, one of the more fraught decisions among surviving family is whether to go for burial or the less expensive cremation option, McGrath said. Either way, they’re looking at costs in the thousands or tens of thousands.

“I like to say that funerals really aren’t for you. You’re not going to be there. You’re going to be gone,” she said.

“A funeral is for your loved ones. It’s for their grieving process.”

Second-generation funeral director Heather Kiteley said a friend once shared an apt description of what a newly bereaved person faces: “the tyranny of micro-decisions.”

Purchasing a prepaid package from a funeral home not only relieves financial strain on those left behind, but it can also prevent family bickering over what the departed would have wanted, said Kiteley, a board member of the Funeral Service Association of Canada and CEO of bereavement-focused financial firm Guaranteed Funeral Deposits.

It’s about taking big, intimidating decisions off a family’s plate so they can focus on other choices that are meaningful to them as they grieve, like who should speak at the service, what music to play and which photos to display.

“I would say almost half the time that I was meeting with families, they woke up that morning not thinking they were going to end their day talking with a funeral director,” Kiteley said.

“And even in those circumstances, the families that had things organized just had a totally different experience with the funeral home. Their experience with us was way less emotionally difficult.”

People can reach out to funeral homes any time to inquire about packages they offer, at no cost. Kiteley said most of the time there won’t be much variation in price, so the big deciding factor will be how at-ease staff make you feel.

Costs for the service can be locked in at today’s prices and the funds are put into a trust account at a financial institution, collecting tax-exempt interest.

If the ultimate cost of the funeral exceeds what’s in the account after the purchaser dies, the funeral home eats the difference, Kiteley said. If it’s the reverse and there’s more in the account than required, the difference goes back to the estate or to the family to use for extra funeral bells and whistles, Kiteley said.

In the event of a funeral home bankruptcy, funds in a trust account can’t be touched by creditors, Kiteley said.

If someone wants to switch homes because they’ve moved cities, for instance, she recommends transferring the funds instead of withdrawing them. Otherwise, starting a new prepaid package from scratch could cost considerably more compared to past prices that were locked in.

A traditional funeral with burial can cost between $5,000 and $25,000, while cremation averages between $2,000 to $5,000, insurer Sun Life has estimated.

Hans Friedrich, an adviser at Sun Life and managing partner at Evolv Financial Solutions, said funds from a deceased person’s estate might not be immediately available, so it’s important to make sure loved ones aren’t forced to dig deep into their own pockets right away.

In addition to prepaid packages from funeral homes, insurance products can help provide quick funds. When a life insurance policy holder dies, a one-time, tax-free death benefit payment goes to beneficiaries.

Sun Life has an expedited claim process that, under some circumstances, sees death benefits paid out to a life insurance policy’s beneficiaries quickly. A client late last year saw money appear in their account within four or five days, Friedrich said.

“The life insurance amount is not tremendous, but it does help provide that instant liquidity for beneficiaries or executors to get this done fairly quickly,” he said.

Trusts and other investment accounts might also be an option, but Friedrich cautions that those might be subject to probate and not available immediately.

Whatever the choice, Friedrich said he likes to hold family meetings so everyone is aware of last wishes.

“It all goes back to communication.”

Lauren Krugel, The Canadian Press