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Benefits of Prepaid Funeral Arrangements

Many people choose to use an estate planning attorney's help in creating a document that will prearrange a funeral and prepay some or all of the expenses involved. Different states have different laws governing prepayment arrangements. Some states have laws in place that ensure that the advance payments are properly applied, while other states offer little or no protection. Talk to your attorney regarding the protection your state requires, and consider the following list of ten things to think about before entering into a prepayment arrangement.

1. What is the level of legal protection provided by your state? Your attorney will be able to give you more information.

2. If you are buying only merchandise, such as a casket and burial vault, the price will be less than if you are also buying funeral services. However, many people find it easiest to take care of all of their merchandise and service needs at once.    

3. What happens to the funds you advance? Some states require that advanced funds be segregated and held in a trust until your death, while other states offer little or no protection.

4. What happens to the interest on the prepaid funeral arrangement trust account? If you make arrangements at a younger age, the interest income could be substantial.

5. Is your prepaid funeral service contract protected in the event the firm you contract with goes bankrupt? Does the firm have a reputation for integrity and reliability?

6. Can you cancel your contract and receive a full or partial refund if you change your mind?

7. What happens if you move to a different state or die while away from home? Some prepaid funeral arrangements can be transferred, but often at an added cost.

8. Will your prepaid funeral contract be an asset of your estate, and thereby subject to estate taxes?

9. Have you informed your family about your prepaid funeral contract? If your family is not aware of the contract, your wishes may not be carried out. Also, if your prepaid funeral contract does not address all of your wishes, have you written a letter to your loved ones informing them of these wishes?

10. Does the firm follow the Federal Trade Commission's Funeral Rule, which says:

• You have the right to choose the funeral goods and services you want (with exceptions).
• The funeral provider must state this right in writing on the general price list.
• If state or local law requires you to buy any particular item, the funeral provider must disclose it in the price list, with a reference to the specific law.
• The funeral provider may not refuse, or charge a fee, to handle a casket you bought elsewhere.
• A funeral provider that offers cremations must make alternative containers available.