Estate planning ensures arrangements, including funeral and memorial services, are prepared ahead of time for when you’re gone. If the unthinkable happens, planning ahead spares loved ones from the stress of making decisions and relieves them from worrying about money during an otherwise difficult time.
Consumers have the option to enter into a pre-need agreement with a funeral home—“locking in” costs for future services. You can then prepare the funds through a trust, cash, bonds or life insurance—and at your death, the funds are used to pay for your arrangements.
Before you decide on a prepaid arrangement, ensure you have answers to these questions:
1) Where are the funds you’ve prepaid? Find out if your funds are held safely and if they earn interest over time.
2) What if the funeral home goes out of business? Know what protections are in place to ensure your funds will be available when needed.
3) Can you cancel the agreement? If you can cancel, see if you are eligible for a refund.
4) Can your funds be transferred? In the case that you move, ensure your funds can be transferred to another home and see if there will be additional terms or fees.
The Funeral Rule
If you choose to prepay, the Funeral Rule is in place to protect you and your finances. Enforced by the Federal Trade Commission (FTC), the Rule requires funeral providers to give consumers accurate price information, along with other disclosures about funeral goods and services.
The Funeral Rule regulates funeral providers, but it doesn’t provide protection for consumers who are victims of noncompliant funeral providers. Protections vary widely from state to state, sometimes providing a window of opportunity for unscrupulous operators.
Before entering into a prepaid agreement, take these steps to safeguard your funds and ensure you will receive the services you paid for:
1) Find out what consumer protection your state provides and whether it regulates the payment methods.
2) Keep your funds or insurance policy protected at a reputable financial institution. Ensure you can check on your funds and policy regularly and see if you are entitled to an annual statement.
3) Arrange your excess funds. Ensure your agreement addresses what happens to any excess funds, and plan now to give to surviving family members, charity or another organization.
4) Know your refund terms. If you cancel the contract, you may be entitled to a partial or full refund. Some states allow the funeral provider to retain a portion of the funds, often depending on how long the contract has been in existence.
5) Inform your family of your plans and where you will keep important documents—including your last will and any pre-need funeral arrangement documentation.
Our experienced team of financial advisors are ready to help you prepare for the future. Contact us today or call 1.800.67 l Busey to request your complimentary copy of a Message to My Loved Ones. Our robust planning document will help outline your legacy with simple fill-in-the-blank style questions and sections for additional thoughts and remarks.
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This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Opinions are not necessarily those of Raymond James. The information has been obtained from sources conserved to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.
Busey Investment Services
201 W. Main St.
Urbana, IL 61801