You may have heard of pre-paid funeral contracts from friends or family members. Perhaps your estate planning or elder law attorney recommended that you get a pre-paid funeral contract. In this blog post our Troy, MI estate planning lawyer will attempt to explain what a pre-paid funeral contract is and some of the benefits of having one.
A pre-paid funeral contract is a contract entered into by a person or persons and a funeral home, cemetery, cremation company, or other entities for their burial, funeral, cremation, and other arrangements regarding the client’s wishes after they pass. This can be as simple as just a contract for remains to be cremated, or as complex as planning the funeral and selecting caskets and headstones. Typically, the client either pays a lump sum to the company they enter into the contract with or pays for the services over a period of time. It is also possible in some circumstances to purchase life insurance policies to pay for the contract.
Having a pre-paid funeral contract often comes with numerous advantages. The first of which is to alleviate some of the stress and pain of your loved ones in a time that will already be difficult for them. It takes the burden of having to plan and pay for a funeral off of their plate so that they can focus on working on other ways to honor your memory or on properly grieving your loss.
Another significant benefit of pre-paid funeral contracts is cost savings. Let’s be honest, the costs of everything continue to rise and funeral, cremation, and burial expenses are no exception. In fact, between 2021 and 2023, the average cost of a funeral with a viewing and burial increased 5.8%. By entering into a funeral contract now, you are saving money for your loved ones long term, as they will not have to pay the increased prices for your funeral, burial, or cremation after you are gone.
One last benefit we are going to discuss today is that certain prepaid funeral contracts are an acceptable means to spend down assets to qualify for Medicaid. For those looking to spend down assets in order to qualify for Medicaid, pre-paid funeral contracts can be an important tool to do so. If you are making a pre-paid funeral contract for Medicaid qualification purposes, it is important to work with a company that is familiar with doing so in order to make sure the pre-paid funeral contract you are entering into is compliant with Medicaid’s requirements.
As you can see, pre-paid funeral contracts have a lot of benefits and can be used for a variety of reasons. While our office does not offer pre-paid funeral contracts, we are still happy to discuss any questions you may have regarding pre-paid funeral contracts, assist with your other Medicaid and estate planning goals, and refer you to professionals who can help with finding the right pre-paid funeral contract for you. Please contact Gudeman & Associates, P.C. today so that we can help bring peace to your loved ones, in their most difficult times.
