Paying for a funeral can require some financial acrobatics. When you include the service, embalming, burial plot and other funeral-related expenses, your family might be on the hook for substantially more.
According to the Federal Trade Commission, a casket alone can set you back between $2,000 and $10,000. It probably seems unfair to leave your final expenses to your grieving relatives and friends. If so, you may want to pay for your funeral costs when you are still alive. Joining a funeral trust is a common option.
A trust the funeral home administers
Unlike other types of estate plan trusts that you set up, a funeral trust comes from the funeral home. That is, many funeral homes have pooled trusts that cover final expenses for the individuals that join them.
If you participate in such a trust, you give the funeral home money to hold until your death. When you die, the funeral home withdraws money from the trust to pay for your funeral and its associated costs.
A strategy for protecting yourself
Even though government agencies regulate funeral trusts, some trusts are better than others. Consequently, before you agree to join a funeral trust, you should research the funeral home to determine whether it is responsible with its finances. You also must know exactly what the funeral trust covers and does not cover.
Funeral trusts have some pros and cons that accompany them. Ultimately, because you probably have some other options for planning your funeral and paying for it, it is advisable to consider each alternative carefully.