Estate Planning: Prepaying for a Funeral

If you have adequate funds that would be available for final expenses upon your death, why would you take your hard-earned, "after tax" dollars out of your pocket now to spend on a funeral? Proper estate planning should include this question.

If your monthly income relies on interest earned from your investments, then using your principle investment money for prepaying a funeral expense might not be advisable. Especially if there would be other sources of income for the estate upon your death. These might include the Canada Pension Plan Death Benefit, insurance of any kind, benefits from places of employment, or Veteran's Benefits. If these death benefits would be more than adequate to cover final expenses at the time, it might be best to hold on to your principle. You might want to use it instead now for more enjoyable reasons.

Another source of funds to use at the time of need might include the sale or your house, car, hobby items etc...if they would provide more than enough funds for your funeral. Perhaps you might feel more comfortable holding onto your cash or using it for something more enjoyable, like taking your grandchildren on a trip.

You can pre-arrange funeral wishes any time, without pre-paying any funds. All funeral homes provide this service. It is always a very good idea to provide this guidance to your family and your executor to relieve them of some worry. It will give you peace of mind to know that final arrangements will be handled in an orderly manner according to your wishes.

However, it is also a good idea to try and beat inflation and taxes by pre-paying an inevitable expense, if you have the money. For example, if you sold your house and had the funds available, by pre-paying your funeral in full, the funeral price is guaranteed so there would be no costs to your family or estate at the time,(unless additional services or taxes occur). The interest earned would be non-taxable unless returned to the estate.

SOURCE

Final Wishes: A Cautionary Tale on Death, Dignity & Physician-Assisted Suicide