Pre-need Funeral Plan Contracts

You may be able to transfer a funeral contract to another funeral home depending on the terms outlined in the agreement. Some funeral homes are willing to accommodate requests for transfer, but not all funeral homes can do this. Contacting the current and potential new funeral homes can provide more insight as to whether this is possible.

If the funeral home indicates that transferring the contract is possible, you must work closely with the current and new funeral home to facilitate the process. The current funeral home will provide guidance about what you need to do to initiate the transfer, such as making a written request or completing specific paperwork to provide consent. The new funeral home will review the contract to determine how much it can be honored. For example, if the original contract specifies prices for goods and services, the new funeral home must decide whether it can fulfill those agreements. 

It is also important to know that transferring a funeral contract to another funeral home may incur additional costs. There may be administrative fees or other charges associated with making the transfer. Similarly, depending on what the new funeral home will honor, you may incur additional expenses if the new provider does not include specific goods or services. 

Sources

“Planning Your Own Funeral”. Federal Trade Commission. https://consumer.ftc.gov/articles/planning-your-own-funeral

Funeral homes can guarantee the prices for specific goods and services in your funeral contract if you select a guaranteed prepaid funeral plan. When you agree to a guaranteed plan, prices for the designated goods and services will remain effective according to the terms of your plan even if the funeral home eventually increases its prices. This means that your loved ones will only pay the prices that were current at the time that you entered into the funeral contract. 

It is important to note that these secured prices are only possible if you agree to a guaranteed funeral contract. A non-guaranteed contract or plan does not provide the same level of protection from rising expenses. Instead, it covers funeral expenses only to the extent that you have pre-paid for them and serves as a deposit for your goods and services with the expectation that the final cost and any additional expenses will be covered by your loved ones. 

Estimating the total amount of prepaid funds to cover funeral expenses can be challenging due to fluctuating costs caused by inflation or other economic factors. However, opting for a guaranteed contract offers predictability by securing current costs and keeping them effective until the time of need. This provides assurance and peace of mind, ensuring that potential expenses are managed effectively.

Sources

“3 Ways to Protect Your Funeral Funds”. Funeral Basics. https://www.funeralbasics.org/protecting-your-funeral-funds/ 

“How to plan your own funeral”. Memorial Planning. https://www.memorialplanning.com/resources/planning-ahead/how-to-plan-your-own-funeral/ 

You can generally change the goods and services selected when you establish a funeral contract if it is allowed within the terms and conditions of the agreement. However, it is essential to be mindful when making changes since it may impact the guarantees made in the initial contract. For example, changing the contract may negatively impact qualifying for assistance if the money paid into a funeral plan includes excludable resources that affect your Social Security Income (SSI) or Medicaid eligibility. If this is a potential concern, most funeral directors can provide additional guidance regarding contract changes and preplanning concerning SSI and Medicaid requirements. 

You may also be limited in what you can change according to the contract terms. Certain types of funeral prepayment may be deemed irrevocable in some states, so it is essential to be aware of the regulations in your region and whether they influence what you can change within your funeral contract. Additionally, although changing the goods and services in the current contract may be possible, changing the cremation or burial would require creating a new contract since it pertains to the final disposition. You can work with your plan provider to determine what you can change within the constraints of the contract or identify what adjustments you can make to meet your needs without making significant changes. 

Sources

“Can I change any of these prepaid funeral services later?” International Cemetery, Cremation & Funeral Association. https://iccfa.com/faq-items/can-i-change-any-of-these-prepaid-funeral-services-later/ 

“What Assets are Exempt for Medicaid Eligibility?” Knox Law. https://www.kmgslaw.com/articles/what-assets-are-exempt-for-medicaid-eligibility 

“10 Questions to Ask Before You Prepay Your Funeral”. Funeral Basics. https://www.funeralbasics.org/10-questions-ask-before-prepay-funeral/ 

According to the National Funeral Directors Association, a preneed contract should contain the following information:

• Identification of the seller (the funeral service provider), purchaser and person for whom the contract is being purchased
• Identification of trustee or insurer (when applicable)
• Rights and obligations of all parties
• Complete description of all goods and services purchased and their specific prices
• How the contract is to be funded
• How substitutions may be made if goods or services are unavailable at the time of need
• Ability to transfer the agreement or funding to another funeral home
• Effect of a change in beneficiaries
• Where and how much of the funds are deposited 
• Tax implications, if any
• Party responsible if additional funds are due at the time of need
• Party to receive any excess funds
• Cancellation and refund policy
• Effect of missed or late payments
• What is included or excluded in any price guarantees*

*Note: Some goods and services may be required at the time of the funeral that are not part of a preneed contract because they cannot be paid in advance. Always ask for clarification about the handling of any items that may still be needed when death occurs.

Additionally, the provider should give the consumer the name and address of the agency that regulates preneed funeral plans in the state and the contact information for the financial institution or insurer that will be managing the prepaid funds. 

The contract should be written in plain language that the average lay person can understand. With that being said, it’s the responsibility of the consumer to make sure they understand the terms of the contract before they sign. According to Joshua Slocum (former Executive Director of the Funeral Consumers Alliance), many of the disputes that arise around preneed contracts occur because the client did not read the entire contract or question the terms and conditions they did not understand.

Sources

“Remembering A Life – A Guide for Your Families”. National Funeral Directors Association. https://nfda.org/resources/remembering-a-life/preplanning-a-funeral/preneed-contracts 

Before you enter into a preneed contract with a funeral service provider, it pays to do some research in advance. Before you even sit down to discuss goods and services, determine whether the service provider is licensed (if licensing is required in your state) and if there are any complaints on file with the state. You can also check with the Better Business Bureau. Reliable businesses generally have an A+ or A rating, which generally means that they have been in business for a while, are financially solvent, and have few customer complaints on file. 

Once you have chosen a funeral service provider that you wish to do business with, ask the following questions before you sign a contract with them. Any provider who is reluctant to discuss these issues with you or offers evasive answers probably does not have your best interests at heart. 

1. If I decide to cancel the contract, can I get all of my money back? If not, what portion of what I pay in advance is refundable? 
2. Can I change the contract if I change my mind about the services I want (for example, cremation versus burial)? 
3. If I change the contract and purchase a less expensive plan, will any price difference be refunded to me? 
4. What happens if I move to another city or state and want to be buried there? Can I transfer the contract to another funeral home? 
5. Are the prices of all items and services I am purchasing guaranteed? If not, what items may change in price and by how much? 
6.  Can any of the items I want to purchase (for example, a casket or urn) be purchased in advance? If so, where will they be stored? 
7. What will happen if items for which I prepaid are no longer available when I die? Will my survivors have to assume any increased costs?
8. What happens if there isn’t enough money to pay for my funeral when I die? 
9. What happens if you sell the company or it goes out of business? 
10. Who do I contact to check on the status of my policy or trust? 

Make sure, too, that the answers you receive from the service provider are accurately described in the contract presented to you. Verbal assurances will not protect you if there is a dispute later on.

Sources

“Preneed Funeral & Burial Contracts – What You Need to Know”. FuneralWise. https://www.funeralwise.com/funeral-cost/prepaid-funeral-contracts/