How will your family pay for your funeral?

I thought I would share a recent experience I had that I believe emphasizes the need my clients have for Funeral Trust planning.

My client died in a local nursing home recently. The only daughter from another city was here in Iowa making final arrangements. She came to my office for help. The local funeral home required $1,705 cash (or credit card) up front immediately for their fee for pickup up of the body at the nursing home, preparation and shipment of same to Cleveland, Ohio where the family was from for services and burial. The Ohio mortuary estimated their fee to be about another $8,000. Daughter had limited resources. She had her most recent paycheck in her checking account which was about $1,000 but no other money to pay these costs upfront!

My client has an existing older life insurance policy with $19,900 of death benefit (about $16k) of cash value. The local funeral home refused to take assignment from the trustee of an Revocable Living Trust. Their company policy is to only accept an assignment from an individual beneficiary. They told me when I called their policy is because they believe it takes so long for a trust to be cleared. Of course, even if they would have accepted this policy, which funeral home do we assign the funds to, in Iowa or Ohio? They both wanted advance payment.

In addition to the above the Iowa funeral homes charge a fee of $180 for processing when there is an assignment from a life insurance policy. This is cover their interest cost for going without payment for a few weeks waiting for the life insurance proceeds. The Ohio mortuary was unsure if they would accept the assignment from the life policy but they charge an assignment fee of 6.5%. This will cost my client an added $500 to the funeral services!

The result of all this was the daughter was confused and even more stressed than normal. Remember her died just died too. She was not prepared for all of these added issues and of course in no condition or position to negotiate these matters very well. The daughter spent an hour in my office making calls to family members begging for financial help!

As you can imagine, as an attorney, I felt completely helpless. I did not like this feeling. My client has a great estate plan with all the right documents to handle matters but a massive gap regarding how to pay for his funeral. Luckily an aunt loaned the money to the daugheter and the Ohio mortuary extended credit for a short time, however at a significant interest rate.

I intend to try to make sure my other clients’ family members avoid this problem! Clients need to address final expense planning by answering the question “If I died today, how would my family for my funeral?” We can help compare the various answers you may have for this question. A Funeral Trust with funds available immediately following a death without need for a death certificate is one of the best ways to close this gap and avoid this heartache.

We include a Funeral Trust at no added legal fees with all our clients’ estate plans. The most important step is to decide how much to fund it with! If you are a client of our firm call us today to find out what steps you need to take to complete and fund your Funeral Trust so your plan is complete.

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