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Who Will Pay For Your Funeral?

When Apple co-founder Steve Jobs passed away recently, he left behind a huge legacy – and a huge financial fortune too. Since Jobs was one of the richest men in America, his family undoubtedly had no problem paying for his funeral and putting Jobs to rest.

Unfortunately, that’s not the case with many other Americans. It’s a sad reality that many families and individuals have to deal with, but the truth is that when many people pass away, their family members or close friends struggle to afford the funeral.

Knowing what to do when you can’t afford to bury a relative can help to relieve some of the stress and heartache of this difficult time.

According to the National Funeral Directors Association, the national average cost of a funeral with a vault was $7,775 in 2010. The cost of a burial without the casket was about $4,265 that same year. For many grieving families, paying thousands of dollars to bury a relative just isn’t economically feasible.

Review low-cost burial options

Cremating someone is usually less expensive than burying the individual in a casket or vault. If your state doesn’t require embalming the body, consider a “green burial” where you don’t have to pay for a vault, headstone or expensive caskets. You can also shop around to find an affordable casket online.

Consider getting a loan

If you have good credit and are comfortable with taking on a personal loan, consider applying for financing from a local bank or credit union in order to pay for the burial. Avoid taking out a cash advance on a credit card because you’ll be responsible for paying very high interest charges and could end up carrying that debt for several months, even years.

Ask other family members to chip in

You may not have to shoulder the responsibility of paying for the burial all by yourself. Consider asking family members to pitch in and help with the costs. Be specific and candid with relatives about how much the funeral costs; ask everyone involved how much they can reasonably contribute; and put together a cost sheet or budget to help you keep track of all of expenses.

A better plan

Since assets will probably be locked up for some time, and life insurance takes time to collect also, why not consider an irrevocable burial trust.  This is an account you can transfer anywhere from $1000 to $15,000 into.  It earns interest, about the same as a CD.  You do not pay income tax on the interest it earns.  The funds can be immediately available at death to cover expenses as they come up.

First you go to a funeral home (any funeral home) and arrange a funeral.  Once the plans are made simply show the trust document to the funeral director.  They will fax the bill to the trust company who will wire transfer funds directly to pay this bill in full within 24 hours.  Other final expenses like obituaries can be paid as well.  When all bills are paid, simply submit the death certificate to the trust company and remaining funds are refunded to the estate of the deceased.  Your family or loved ones are in full control of how and where this money will be spent.

We are all going to die sometime.  Why not make this easy for those left to deal with the arrangements?  Do your children have $4000 to $8000 or more sitting in their checkbook right now?  Mine probably don’t either.  If you have money sitting in the bank, where it will likely be locked up at death, why not make things easy for those you leave behind and transfer some to an irrevocable burial trust?

One more thing

For those who may need long term care and require Medicaid to pay for it, Medicaid requires complete impoverishment and the cashing in of life insurance over $1500 to get Medicaid funding for long term care.  You cannot give money away in the five years prior to applying for Medicaid. Medicaid allows the irrevocable burial trust as it can only be used for burial expenses.  The trust protects these funds from the Medicaid spend-down.

Since this is often a long term care issue, we at TheLongTermCareGuy.com can open your irrevocable burial trust account at no cost to you.  No fees of any kind.  Call us at (800) 219-9203 or locally in Wisconsin at (920) 884-3030.  We are here to help.

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The Long Term Care Guy