You’ve might’ve heard of people writing their own obituary, but what about planning their own funeral? Due to limited price transparency in the funeral industry, experts are saying it’s the best way to save money. Avoid spending more than necessary by carefully planning your funeral in advance, and let your loved ones know about it.
The Hidden Costs of Funeral Homes
Funeral homes are often criticized for lack of clarity in pricing. This had been pointed out by consumer groups for a long time. But the practice still persists, according to a new study.
There is a federal Funeral Rule, which was established in 1984, that allows consumers to choose the goods and services they want. As part of the rule, funeral homes must to present a printed, itemized list of prices. Funeral homes must also detail basic and less expensive cremation and burial services.
However, there is no clause in the law that forces funeral homes to post their pricing online, according to a joint study from the Funeral Consumers Alliance and the Consumer Federation of America.
The report states just 30 of the 193 funeral homes in small and mid-size state capitals have prices posted on their websites. In California, where state regulations require funeral homes to include pricing information online, 18 of 25 Sacramento funeral homes follow the regulations. The study found that more enforcement by the Federal Trade Commission would see funeral prices readily available to the consumer.
“There is a documented history of the funeral industry keeping prices hidden or hard to find,” said Joshua Slocum, executive director at the Funeral Consumers Alliance.
Prices Are Ranging $6,000 for the Same Service
The so-called hidden costs lead to larger funeral bills for consumers. For example, a simple cremation in Washington, D.C, can range in price from $1,295 to $7,595 depending on the funeral home. Most consumers neglect to ask for the price or compare the costs of a few different homes. This is due to the emotion of losing a loved one, combined with spiritual and religious beliefs.
“We have to be able to say, ‘The amount of money we spend on the funeral is not the way we measure our love for the person who died,'” Slocum said.
Here’s are 4 tips on how to plan your funeral without overspending.
1. Plan Ahead
Every time someone asks for advice on how to find a cremation or burial at a reasonable price, Slocum recommends doing some price comparison. It’s advisable to check 5 or 6 different funeral homes to find the lowest price. This ensures that you will think in advance. Often, when somebody dies, there isn’t time to comparison shop.
2. Set Funds Aside
A good piece of advice from Rita Cheng, co-founder and CEO of Blue Ocean Global Wealth is to set aside funds or prepay for some of the arrangements. “Don’t leave your loved ones mourning your loss and then figuring out how to pay for things,” Cheng says. “That’s stressful.”
Consider adding funeral services to your life insurance policy or put funds aside to cover the costs in a bank or brokerage account. While you’re there, consider setting up a payable-on-death agreement on your bank accounts. Agreements like this allows funds to transfer directly to the beneficiaries, bypassing the will process. You can set this up for checking, savings and money market accounts. But, investment accounts require a transfer on death arrangement.
When you are putting these plans in place make sure you are working with credible companies when you pay for services, plots, or tombstones. Also, discuss what will happen if they are no longer able to fulfill the contract.
3. Make Your Wishes Clear
Slocum suggests that a funeral planning kit can go a long way to document your wishes. Give paper copies to your loved ones and avoid storing documents where they can’t be accessed like on a password protected computer. “Once you get those thoughts and wishes down, hopefully that’s part of a conversation,” Slocum said.
Store this document with an up-to-date version of your will and advanced medical directives. These will stipulate your health care wishes if something happens to you. You’ll also need to give your family permission to change those plans if necessary. For instance, one mother asked her daughter to bury her next to her husband in Oregon – but things got complicated when the mother died in Tennessee. Anticipate unexpected developments by telling loved ones, “I give you permission to do what you need to do,” Slocum said.
4. Make it a Team Effort
If you’ll be in the position of planning a funeral in the near future, don’t do it alone. Ask your spouse, a family member or friend to help you, suggest Cheng. This support will allow you make better choices and stick to the budget.
The clearest way to plan for your funeral is the open the conversation. Cheng says, “I’ve always positioned it with clients like this: We’re all going to leave this world. If we don’t talk about it, it doesn’t mean we’re not going to die.”