Pre-Paid Funeral Arrangements

When people think about putting their affairs in order they typically sit down with an attorney to put together a Will or Trust. But for many people that isn't enough. They also want to make sure their funeral arrangements are set ahead of time. Prepaid funerals have become a popular alternative, but before you put down any money with a funeral home you need to know what to look out for. Pre-Paid Funeral Arrangements (sometimes called "Pre-Need Funeral Arrangements") can be a good planning tool if you want to make sure things go the way you want them to or if you want to save your family from having to make major decisions during what is sure to be a stressful time. You also can lock in the cost of these arrangements now. But while the concept of pre-paid funeral arrangements is a good one, it doesn't come without some serious legal considerations.

Before you consider any pre-paid funeral arrangements, make sure you have received a copy of "A Buyer's Guide to Pre-Need Funeral Arrangements" from the funeral director. Under Massachusetts law, the funeral director must supply you with the guide at the time you begin discussing any such arrangements. You also need to make sure you are dealing with a reputable funeral home. There are a number of regulations that dictate what a funeral home should or shouldn't do, but unless you know what to ask you won't know if they are going by the books. For information on the services and goods see our previous article entitled "The Funeral Rule." Additionally, with prepaid arrangements you have to consider what may happen between the time you make the arrangements and the time you need them! For instance, what if you want to change your mind and want your money back, what if you move or what if the funeral home goes out of business?

A serious issue you have to consider is what happens if you prepay for funeral arrangements and then change your mind? Can you get your money back? The answer is it all depends on when you change your mind and what type of contract you signed with the funeral home. If the contract you signed was revocable, you should be able to change your mind and get your money back at any time. If the contract was irrevocable, you may very well be stuck. In Massachusetts, if you sign an irrevocable contract you only have 10 days to change your mind, so ask questions and read the contract carefully. Don't just assume you can transfer the money you paid to another funeral home!

As to issue of protecting yourself should the funeral home goes out of business, if you enter into a contract here in Massachusetts the funeral home that you hire can't hold the money you have prepaid. This is a fairly new rule though so if you entered into a prepaid arrangement agreement more than a few years ago it would be a good idea to check out your contract. Under the new rules, the funeral director must explain what will happen if they go out of business or the funeral home is sold. He or she must also disclose if they receive a commission on the sale of an insurance policy to cover the costs and who is going to hold your funds.

Medicaid/MassHealth also can come into play when you are considering making pre-paid funeral arrangements. If you structure things correctly, money you allocate for your own funeral arrangements should not be factored in when determining your eligibility for financial assistance - but be extremely careful because the rules are very tricky. This is another area where you need to carefully weigh the pros and cons of a revocable vs. irrevocable contract. Ask the funeral director what he or she recommends and then speak with your attorney or CPA before you make any final decisions.

You also need to be aware that there is a very particular 3-part contract the funeral director must provide you with. These are standardized documents approved by the Massachusetts Board of Registration in Embalming and Funeral Directing. Make sure you are given the following:

- A standardized pre-need funeral contract
- An itemized Statement of Goods and Services (FTC Compliant)
- A Trust Document with a Bank or Insurance Policy

Finally, when you are making arrangements don't forget to consider where you may want to be buried and how the plot will be paid for. Talk to your family and get their input. Tell them about the information you have learned and what to look out for. It's a tough subject, but the more you address the issues now, the less your family will have to deal with later on. And they can only thank you for that!

Copyright 2006 - Law Office of Gina M. Ghioldi, P.C.

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