Friday, October 24, 2014
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Plan a Funeral at an Affordable Price



Introduction

We laughed when we learned that Ray, notorious in the family for being frugal, was trying to sell three "bargain" funerals he'd purchased in advance.

Ray, his wife, and his mother-in-law, who lived with them, were moving from San Diego to the hill country of Texas. The funerals were not transferable to another funeral home, and transporting the bodies back would wipe out the savings he thought he had locked in and then some.

Ray was never able to resell the funerals and took a loss of several thousand dollars. Funeral resales and direct prepayment to a funeral home are not smart consumer practices. But what Ray intended to do—preplan—is wise.

Savvy consumers do the research

"There is no question about it. The most important thing is to do all the homework and ask all the questions in advance," says Dan Foce, certified public accountant and business manager for Cress Funeral Homes in Madison, Wis. "Funeral directors are like wedding planners in terms of what they plan and coordinate. Wedding planners often have a year to help you make decisions. Funeral directors have two to three days."

Funerals can be expensive. In the U.S., the average "traditional" adult funeral, not including cemetery expenses or outer burial container, cost $6,560 in 2009, the most recent year for which the National Funeral Directors Association, (NFDA), Brookfield, Wis., has figures online. A traditional funeral means embalming, a casket, a wake or visitation, a funeral ceremony, a procession, and graveside services.

The NFDA says funerals cost $708 in 1960. Consumers have options to bring today's costs down to 1960 levels.

Exercise caution on prepaid funerals

To make sure money is available to carry out your final wishes, you need to know how much to set aside. That's a decision based on the type of funeral and burial or cremation you want. In your planning, you must also take into account whom you're doing business with, where the money is being held, and in what form.

Consumer protection groups say prepaying directly to a funeral home is a bad idea.

Although laws controlling what can be done with preneed funds differ from state to state, consumer advocates nationwide recommend two main types of prepayment: insurance-funded plans and trust-funded plans.

In plans funded by life insurance, the beneficiary can be either the funeral home or a reliable friend or relative who agrees to carry out your wishes. If the funeral home is the beneficiary, the policy should be irrevocably assigned to a funeral insurance trust held by an institution in which you have full confidence. The trust will pay the funeral home.

That lets your family use a different funeral home if need be. The funeral home you chose, for example, may have gone out of business, or you may have moved.

Nonetheless, the death benefit should be tied to a guaranteed-price preneed contract between you and the original funeral home and the statement of funeral goods and services covered by that contract.

If the policy is irrevocably assigned to a funeral insurance trust, it cannot be cashed out or borrowed against. But that also means it's not subject to seizure by Medicaid, if Medicaid is paying for your care.

Trust-funded plans are set up through a credit union or other savings institution. They can be revocable or irrevocable. An irrevocable trust cannot be cashed out and is also protected from seizure by Medicaid.



Basic services fee

No matter what you believe is necessary to be respectful—direct cremation, traditional funeral, or something in between—you have to pay the funeral provider's basic services fee. It covers the provider's overhead: the costs of making arrangements, consultations with survivors, administration, staff, facilities, equipment, permits, preparing death notices, and coordinating cemetery or crematory arrangements. The average basic services fee was $1,817 in 2009, according to the NFDA.

At Cress Funeral Homes, this fee is $2,395 in 2011. But at its low-cost affiliate, Informed Choice, Milwaukee, the fee is $1,200.

It's possible to find such affiliates in most midsize U.S. cities, according to Foce. There are providers across the country with minimum facilities and equipment catering to those who want low-cost funerals, according to McMillan, whose basic services fee is $1,995.

Each funeral company figures its prices differently, says Saether. One may have a higher basic services fee but lower markups on goods such as caskets. Your purchase total may be less from a provider with a higher basic fee than from one with a lower basic fee. Saether's basic services fee is $3,755.

The Federal Trade Commission requires all funeral homes to provide detailed written price lists.

Determine well in advance what you want

"Many people have no idea what a funeral costs beforehand. So, it's a very good idea to go into a local funeral home and talk about costs and find out the range you can spend with them," advises Steve McMillan, owner of McMillan-Small Funeral Home in Myrtle Beach, S.C.

The range depends on the goods and services you want. Aside from donating the deceased's entire body for medical research, which the Funeral Consumers Alliance (FCA), South Burlington, Vt., says may involve no cost, direct cremation is usually cheapest. It eliminates the need for embalming and includes no visitation, ceremony, procession, or graveside service.

If you choose an unfinished coffin or heavy cardboard enclosure to house the body during transport to the crematorium and a family-provided vessel to store the ashes at home or until they are scattered, it's even more economical.

If you choose cremation and opt to still have a memorial service at the funeral home, there will be costs for this option.

Shop around, but be sure you're comparing apples to apples, urges Paul Saether, owner of Saether Funeral Home in Blanchardville, Wis. The Federal Trade Commission (FTC) requires all funeral homes to give out written price lists of all the items and services they offer.

Casket costs vary widely

The basic services fee and the casket generally are the most expensive parts of a traditional funeral, according to the FTC. The average cost of a casket in 2009 was $2,295, according to the NFDA. But economy caskets are available. "We have caskets from $800 to $8,000," says McMillan.

You also can buy a casket online. Federal law requires funeral homes to let consumers use one bought elsewhere and not be charged a fee to do so. You can find independent casket makers by searching online for casket purchase. Or you can go to discount retailers such as Wal-Mart, which has caskets both in stores and online for anywhere from $995 to $3,199. Costco has been selling caskets online for more than five years. Costs, shipping included, range from $950 to $2,200.

The average cost of a casket in 2009 was $2,295, according to NFDA.

That doesn't include the cost of an outer burial container. No laws in the U.S. require either a vault or a grave liner, but most cemeteries require one or the other; they don't want hard-to-mow craters forming when the ground settles.

The exceptions are cemeteries that specialize in "green" burials. They generally don't allow vaults or grave liners, even though neither prevents a body from decaying.

A grave liner often is cheaper than a burial vault. A liner is simply a concrete cover over the top and sides of a casket, while a vault surrounds the casket completely. NFDA offers no average cost of a grave liner but lists the average burial vault at $1,195 in 2009. This bumps up the average cost of a traditional funeral in 2009 to $7,755.

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