Pre-paid funerals from trusts are something that you may not have heard of before. However, they are one extremely useful way of ensuring that the costs of funerals are covered. This way your loved ones don’t need to worry about that when you have gone. Here’s a look at what pre-paid funeral trusts can offer and when you might consider one.
What Is a Pre-Paid Funeral Trust?
A pre-paid funeral trust is exactly what it sounds like – a trust that you can set-up which will pay for the cost of your funeral once you have passed on. This trust has no other purpose and any funds paid into it are used exclusively for funeral expenses. The trust is managed by trustees who work in conjunction with a funeral director or funeral plan providers.
Why Would I Need a Pre-Paid Funeral Trust?
Pre-paid funeral trusts are a great way to prepare for passing on without having to make payments upfront. It allows for your loved ones to have some input into your funeral arrangements whilst having the peace of mind that the cost of it is already taken care of. Funerals are not a cheap affair. You can choose to put away a minimum amount, the average cost of a funeral, or any figure you please to help with the expenses. Pre-paid funeral trusts can cover the cost of the funeral director, the registration of death, the cost of your coffin or casket, the hearse, burial or cremation, the headstone or plaque, the flowers, the celebrant, the wake, and your notice of death listing in the obituaries.
How Does a Pre-Paid Funeral Trust Work?
Ordinarily, the pre-payment for your funeral is paid to whoever the funerals plan provider is. A contract is given to the one the plan is for, confirming payment. This payment is then put into its own trust fund and managed by the named trustees until the policyholder dies. The funds are then paid to the funeral plan provider to cover the cost of the funeral.
The funeral plan provider is the one that is responsible for the funeral, not the trustees or the trust fund.
Cost of A Pre-Paid Funeral Trust
The cost of pre-paid funeral trust varies from provider to provider. However, it normally requires a set sum of money to be paid. This is agreed upon by both parties. If the amount in the pre-paid funeral trust is not large enough to cover the cost of the funeral, then the funeral plan provider must cover the shortfall.
When taking out a pre-paid funeral trust, be careful to make sure the terms of it are agreeable. You can have it so that payments are over a number of years or as a single payment when you set up the agreement.
You should take special note of what will happen to any surplus in the trust after the funeral costs have been paid.
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