Save Money by Planning Your Funeral

Funerals are never a comfortable topic to discuss, much less to debate about regarding monetary savings. And yet, according to the National Funeral Directors Association, Americans spend about $9,000 per funeral (excluding cemetery costs). If there is a service performed at the gravesite, a fancy headstone set in place, and a reception following the burial, then the costs are driven even higher.

However, due to the recession, more and more people are talking about and looking for cheaper funeral arrangements. Also, many people are preplanning their funerals, in order to spare their relatives the trouble and guilt involved with choosing more economical burials. After all, you might feel guilty about burying your dear mother in an unfinished pine wood coffin instead of a velvet-lined brass casket, or even Michael Jackson's $25,000 Prometheus. When planning your own funeral, though, there is no such qualm.

Typically, preplanning of a funeral is performed with a funeral home. There, the funeral director has you select the type of services you want and the kind of coffin in which you wish to be buried. The funeral director will also facilitate cemetery plot and monument arrangements with the cemetery. You prepay the funeral home for the cost of its goods and services today, which protects you from inflation later on. Doing this also protects your loved ones from the sudden onslaught of making financial decisions during their time of grief.

Unfortunately, there are some pitfalls when preplanning and prepaying for a funeral. Most consumer groups are hesitant about recommending prepayment, since there is no one to enforce that your specific wishes are carried out (the state of New York might be an exception, according to the Funeral Consumers Alliance Slocum). Many funeral homes are allowed to substitute different materials and services based on availability or state regulations, and to pocket any leftover money not used for the funeral. There is also the possibility that the funeral home will go out of business. Finally, horror stories abound, such as the recent scandal at Burr Oak Cemetery in Chicago, where bodies were dug up and the gravesites resold.

What can you do to protect yourself? First, go on the Federal Trade Commission's web site and read about The Funeral Rule. This site is invaluable in terms of alerting you to what is fair and expected when planning a funeral. For example, you will learn that a casket is not required if the body is to be cremated. Also, any casket or urn that you purchase via a third party (online, self-assembled, etc.) must be accepted by the funeral home. By reading The Funeral Rule, you will be better prepared to handle the preplanning of your own funeral or even someone else's.

If you do select prepayment, find a plan that offers the benefit of a full refund with little or no penalty. The plan should also be transferable to another state if you happen to move. Be sure to designate your estate as the beneficiary of any leftover monies that are not paid out for your funeral. Otherwise, the leftover monies will probably be kept by the funeral home. Doing this also stops the funeral home from being tempted to give you a cheaper funeral than you originally requested. Finally, don't forget to have all these conditions drafted into a guaranteed agreement that is signed by both you and the funeral home. In this written agreement, the funeral home must confirm that your funeral will be conducted for the agreed-upon price, plus interest, and that certain conditions will be met.

Should you choose to not do prepayment with a funeral home, then your best bet is to set aside the money in a Totten Trust. This is an individual trust, or savings plan, from which you can withdraw funds at any time. The money can be allocated to a certificate of deposit, a money market account, or some other type of savings account which bears interest. You also get to designate the beneficiary of this trust. Upon your death, the beneficiary can remove the funds immediately and use them to pay the costs of your funeral.

If you wish to be really money-savvy about your funeral, however, immediate cremation with no viewing is still the most economical method available. Should you wish for a more "traditional" burial, it is best to comparison shop at different funeral homes, monument companies, and cemeteries. Also, do realize that the single most expensive item, the casket, is typically inflated 300-500X its factory cost. Many private coffin makers charge much less for their coffins (the average price being about $800). Self-assembly kits are also available, and cost a fraction of what you'd pay at the funeral home (prices start at $350). Finally, the idea of "green funerals", which utilize no headstone and just a regular, environment-friendly pine wood box, are becoming ever more popular these days, and not just because of their low cost.

While the timing of your funeral and burial is not under your control, the where and the how are. With some planning and research, how much you or your loved ones end up spending for your funeral can also be under your control.