Should you pay for your funeral so your family don't have to?

Should you cover your own funeral costs so your family doesn't have to? Margaret McKay explains how to pre-pare or pre-pay for the funeral you truly want.

By Margaret McKay

We work hard at looking after our family throughout life. One of the kindest things we can do is ease their burden when we finally shuffle off to that big fairway, bridge table, or camping site in the sky (circle whichever is appropriate).

Pre-pay – great idea or fraught with complications?

There are several ways to arrange your funeral in advance, including:

• funeral insurance
• funeral bonds
• funeral director pre-pay
• dedicated savings account.

Funeral insurance and funeral bonds

These are really variations on a theme – committing money over time to provide a lump-sum pay-out upon the death of the person covered. There is invariably a cooling-off period, after which no money can be recovered until death.

Several offers are available including from Australian Seniors. While coverage amounts are realistic in today’s terms, there is no guarantee that they will fully cover funeral costs in the future.

While the descriptor includes the word funeral, both funeral insurance and funeral bonds actually pay a lump sum to the designated beneficiary (which may be a funeral director) and the funds can be used for any purpose.

Funeral director pre-pay

The advantage here is that if you pre-pay now for a specific casket and service such as cremation, they should be provided at no extra cost when the time comes, irrespective of price rises that may have occurred in the meantime.

The funeral home acts purely as an intermediary, and funds received are held in trust by approved third party facilities. The Australian Funeral Directors Association is an excellent online resource.

To protect you if they go out of business, funeral directors must put your money into a registered funeral fund in:

• New South Wales
• Queensland
• South Australia
• Victoria
• Tasmania
• Western Australia

There are fewer protections in the Australian Capital Territory and the Northern Territory, so moneysmart recommends using a funeral bond in those territories.

It should be noted that pre-paid funerals, unlike funeral bonds and insurance, are exempt from assets tests.

Dedicated savings account

The advantage of this method is that your saved money is available to you at any time should you require it. This is probably the greatest disadvantage as well, as the temptation to raid the piggybank for a holiday may prove to be too great.

Burial or cremation?

This choice may be influenced by religious beliefs, or simply personal preference. There may be a cost difference, or perhaps a preference to be buried in a family plot – often organised and paid for well in advance – with the intention well telegraphed to close family.

Consider the downsides. Will loved ones have a need, as part of their grief process, to visit a grave site regularly? Will cremation deny them that? Family discussion ahead of time can be extremely beneficial.

A cremation may be seen as a simpler solution, and ashes can be interred in a wall space or rose garden, or returned to the family to be dispersed in a meaningful location with an accompanying intimate family gathering.

Read more about the simplicity of direct cremation.

Amazing Grace or Monty Python?

What style of funeral service would you like for your final fling?

Some folks opt to not have any formal service at all, but rather, allow the funeral director to deal with things completely, followed by a gathering sometime later for family and friends to celebrate the deceased’s life in whatever manner is befitting.

This can avoid the often intense and difficult surroundings of the funeral parlour – no matter how tasteful that setting may be.

Read more on how to say goodbye memorably. You may also want to consider organ donation or donating your body to science after death.

Cross the I’s and dot the T’s, or let the family work it out?

We might think that deciding every possible detail of our funeral will help the family by alleviating them of all decisions. However, while some direction as to the general theme might be constructive guidance, it is worth considering that working out the day together can be a beneficial part of the grief and recovery process for loved ones.

It is possible that intricate plans made many years ahead may spell out every detail, yet fail to include the role of junior family members who were not born when the plans were made. Perhaps a general direction is more useful than an item-by-item list that may be more stressful than helpful.

Whatever your desires, write them down and discuss them

It’s probably a general truth that families don’t relish talking about the potential death of loved ones, and invariably, starting such conversations can often be met with, Ah Mum/Dad, heck, you’re going to live forever, let’s not go there quite yet!

It’s a response more steeped in embarrassment than factual prediction, yet it is understandable. Perhaps a little persistence down the track is called for, and however it’s handled, it’s important to let your intentions be heard, and equally vital to write them down. Your note can be included in or stored with a Will, so there’s no doubt about your preferences.

You might even end your note with those famous words of Clint Eastwood: Go ahead, make my day!

_{Advice given in this article is general in nature and does not take into account your personal circumstances. It is not intended to influence readers' decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.}