Skip to main content
Kentucky Bankruptcy, Business, Probate Lawyers

Pros and Cons of Prepaid Funerals

Prepaid Funeral

Remember when it was time to buy a new car and you spent time poring over models, colors, dealers, options, prices, incentives and safety ratings? Investing in a new vehicle is a big deal, and any large purchase, whether for a product or a service, should involve comparison shopping. Although not a fun purchase like a car or a big-screen TV, paying for your funeral in advance can bring peace of mind – to you and your loved ones.

The truth of the matter is, in death, as in life, someone has to pay for it. Paying and planning are separate issues, and you can preplan without prepayment. A survey conducted last year by the National Funeral Directors Association of adults older than 40 found that of those respondents who had prearranged their funeral only about 26 percent had prepaid. Funeral homes typically set up prepayment plans either through a trust or insurance. Three-, five- or 10- year payment plans are common, and age is a determining factor in how long you can expand payments.

Some advantages in prepaying include:

  • Comfort in knowing that the money needed for your funeral has been set aside
  • Ensures that you get what you want, such as the casket, type of service, and plot
  • Tends to result in lower cost because there’s time to comparison shop without the pressure of bereavement
  • Pays for tomorrow’s funeral at today’s prices
  • Sets funds apart from other assets if you end up having to apply for certain social benefits such as Medicaid or SSI.

Disadvantages include:

  • Funds being misspent or misappropriated
  • Funeral service directors going out of business
  • Difficulties with refunds or transfers if you move
  • Money paid today may not cover inflated future funeral costs
  • Tying up funds that you might need between now and then for emergency purposes
  • Your survivors may not be aware you have prepaid your funeral
  • If payment is made in installments and you do not complete the payments, your
    refund may be reduced by a sales charge, which could be as high as 30 percent
  • If death occurs prior to the time you complete payments, your agreement may
    not be honored in full.

Of course, the funeral industry encourages people to prepay, but another way to finance your funeral is to set up your own payable-on-death (POD) savings account. Make the account’s beneficiary the person who will be handling your funeral arrangements, price current expenses for the funeral you want, and invest that amount. This arrangement allows you to maintain control of your money while you are alive and makes it immediately available upon your death, without having to go through probate. The downside of this flexibility is that, unlike the other options, it does not guarantee that the money will be spent as you wished.

At Bunch & Brock, we understand it can be hard to think about mortality, and even harder to plan for it, but with more than 35 years of experience in the state of Kentucky, we have helped many people develop the best plan for their situation. To get started or if you have any questions about this topic, call us at 859-254-5522 or fill out this online form.