No one ever wants to think about their own death or funeral, but one of the best things you can do for your survivors is to pre-plan, and, if possible, pre-pay for your funeral.
When you do not pre-plan or pre-pay, then clearly it is up to your family or friends to do this for you. Unless you give verbal instructions before you pass, your survivor will chose what they think is best and will be left to fill in the blanks. It’s entirely possible that you purchased a burial plot (or had one purchased for you by a parent) that goes unused because your survivor didn’t know this was available. Plus, your survivors will be grieving and may not be able to make clear decisions. Further, depending upon the funeral home used, your survivor may be pressured to pay from their own funds for your funeral, with the assumption that they will be paid back later from your assets – which may not happen. I’ve seen children pay for funerals with a credit card or home equity lines of credit. This creates additional expense.
I advise my elderly clients to visit a funeral home of their choice and plan out their wishes and arrange for payment. Some clients pay directly for the funeral home out of savings, while many others will assign a life insurance policy to the funeral home. Ohio law dictates that a funeral home must hold the funds you pay them, or assign to them, in trust, until the funeral takes place. If you change your mind about your funeral wishes, the funds can be withdrawn. The funds are also held independent of the funeral home, so if you move, the funeral home is sold or you wish to change your funeral home, this can be done easily. Lastly, by pre-paying, you lock in the price for most of the services provided.
Many clients choose to simply take an insurance policy and name a child or friend with the intention that that child or friend will turn around and pay the funeral costs post death. Although I would like to think most people will honor your wishes and pay that bill, it is legal for them to take the life insurance proceeds and leave the funeral bill unpaid.