Question: My father is in his eighties and although he is in good health, he would like to plan and pay for his funeral now. Does it make sense for him to do this?
Answer: Yes, it does make sense to make plans for your father to make and pay for his own funeral arrangements. Many people pre-arrange and pre-fund their funerals as part of their estate plan. This arrangement can be done by either (1) going directly to the funeral home of your choice whereby the funeral is partially or fully pre-paid through the establishment of a funeral trust with the funeral home as trustee, or (2) the money can be deposited into a bank passbook account for the benefit of the funeral home.
Advantages of pre-planning and pre-funding one’s funeral expenses include peace of mind for the individual pre-arranging, the ability to make personal and specific selections for the funeral service, relieving the financial and emotional burden on loved ones, and for purposes of Supplemental Security Income/Medicaid can serve a spend down when necessary. A pre-need funeral trust allows recipients of SSI/Medicaid to set aside money to fully fund the funeral service of their choice before their funds are exhausted down to necessary eligibility levels or these government sponsored programs.
New York State mandates that prearrangements with New York funeral homes be revocable, except for SSI/Medicaid recipients. This means that all prearrangements (except when prepared for Medicaid spend down purposes) may be canceled at any time prior to death and the entire balance, including all accrued interest, must be refunded within ten (10) days of the request. New York State Law also mandates that pre-need burial trusts for applicants or recipients of SSI/Medicaid be irrevocable. This means that the prearrangement may not be canceled prior to death nor can funds be refunded if the actual funeral costs are less than then funded agreement. Thereby, an individual with a revocable agreement would have to convert it to an irrevocable agreement if they were to require Medicaid in the future
Regardless of whether the prearranged funeral agreement is revocable or irrevocable, your father or his children (after his death) can change the funeral home of choice at anytime. In New York, a funeral home is obligated to transfer the monies to the new funeral home within ten days of the receipt of a request to do so.
If he decides to pre-pay his funeral expenses, he should advise his family that he has done so and place the agreements receipt in a safe place so that there is no confusion about the arrangements in the future.