Prepaid cremation and pre-planning your services can be a relief to your family after your passing. Licensed funeral director Rebekah Peoples at Boston Cremation discusses how to pre-plan and pre-pay for your cremation in this podcast.
John: Hi, I’m John Maher and I’m here today with Rebekah Peoples, a licensed funeral director with Boston Cremation. Today our topic is the benefits of a prepaid cremation. Welcome Rebekah.
Rebekah: Thanks, John.
Prepaid Cremation Defined
John: Rebekah, what is a prepaid cremation?
Rebekah: Prepaid cremation simply means that people either come to the funeral home or now we can do it through email or even snail mail and pay for their cremation services ahead of time.
Benefits of Prepaid Cremation
John: What are the benefits of prepaid cremation versus waiting for somebody to pass away and then making the arrangements?
Rebekah: There are actually a couple of advantages to that and it’s interesting because we hear all kinds of responses from people coming and saying, “My friends are so supportive of what I did, they all have their arrangements made ahead of time.” To, “My friends are freaked out that I came and made my funeral arrangements and prepaid.”
Rebekah: Somehow they think that you’re jinxing that. If it’s true that people are afraid that what they are talking about is going to happen, I’m going to start talking about winning the lottery
Rebekah: The two main advantages of that are, and this one we hear a lot probably more than the other one, is peace of mind. Because everybody, probably 90% of the population, if you happen to be in a conversation with somebody and you say, “Are you going to be buried or cremated?” They know instantly one or the other.
John: They’ve thought about it.
Rebekah: Yes, there are going to be a few people that [don’t know], but everybody usually knows what they want or, “Yes, I’m going to have this big church funeral and I want 500 people there. We’re going to have a big meal afterwards.” To, “I just want something simple, I don’t want there to be a lot of people there. If my immediate family wants to be there, we are just going to gather around the grave and say a prayer and that’s all I want.” Everybody’s wishes, that’s a thing though, that’s the advantage of pre-planning, because then you make sure that it’s in writing what you want.
Whether you want the big elaborate service or whether you want something simple, it’s in writing. Most of the time, somewhere in those arrangements is going to be your signature. Attesting that that’s what you wanted. As funeral directors, we are pretty much ethically bound to follow what it is that you wanted. When something is in writing, we are bound to honor what it is that you wanted.
Prepaid Cremation Helps Your Family from Having to Cover Costs
Rebekah: When you prepay that, it does even more. Because not only does it lock in the kind of services you paid for, but also almost every funeral home guarantees that when you prepay, it’s going to lock in the price. What that means is people will say, “You’re getting tomorrow’s funeral at today’s prices.” Yes, that is what you’re getting, but when people say, “That means that a funeral that costs $10,000 now, if I die 10 years from now, it’s still going to be $10,000.
That’s not completely accurate, but what happens is, is that $10,000 you paid is going to accrue interest in that time. The interest stays in the account, tax free, and then at the time that you pass and the funeral home performs the services, the interest usually offsets the inflation. If for some reason it doesn’t, most funeral homes will guarantee their price. If, say you paid that $10,000 and 10 years from now the funeral costs $14,000, and there’s only $3,000 worth of interest in there.
John: Then you’ve got $13,000 here to pay for a $14,000 funeral.
Rebekah: Yes. The funeral home, if they have guaranteed their prices, will not come back and ask your family for that extra $1,000.
Rebekah: One thing that you do need to notice is that, there’s of course paper work associated with that. On one of the forms that’s required by Massachusetts’ law says, “What percentage of the price that you paid is the funeral homes’ costs? What percentage is outside costs?”
The most common outside costs are, how much it costs for the cemetery or for the crematory. What it costs for a newspaper notice. What it costs for a service at church. What it costs for certified copies of the death certificate. Those are the most common things that are added on to a funeral home’s charges. They’re not the funeral home’s charges, they are charges of the newspaper, the church, the cemetery.
John: The funeral home has no control over them.
Rebekah: Exactly, we can’t guarantee that part of the prices.
Rebekah: We can only guarantee our own, that’s what’s in writing. But most of the time in this area, it doesn’t hurt. I know that more and more funeral homes are starting to add on an extra percentage just to cover whatever the inflation will be, because there are some businesses that raise their prices more frequently than we do, than funeral homes do.
Informing Your Family of a Prepaid Cremation
John: Okay. I believe we talked about before, when you have the prepaid cremation or that you’ve done the pre-planning, that it’s important to make sure that the funeral home is not the only ones who know about that and that you should make sure that you leave some sort of notice or a receipt for that prepaid cremation for your family to find or talk to your family about these plans that you’ve made. To make sure that they know what your wishes are and that it doesn’t go unnoticed because you are not around after you’re gone to let your family know what your wishes are.
Rebekah: That’s true for a couple of reasons. First of all, you may have put in your funeral arrangements something that your family doesn’t necessarily agree with. If we go back to what I mentioned about the person who says, “I don’t want a big elaborate funeral, I just want to have my family and friends gather at the grave side.” What happens in a case like that is, it’s important that they know that’s what you want. It’s important they know where you planned that.
If they don’t know that, they might go to a different funeral home and plan that big elaborate funeral that you didn’t want. Rather than just contact the funeral home and make your arrangements with us and we have them on file, that’s great. If one day we pick up the newspaper and see the obituary that it’s a different funeral home and that they are planning something completely different, because they didn’t know.
What we do, almost invariably, when people come in and say that they want to pre-plan, whether they prepay or not, we make an extra copy of the paper work and say, “Whoever is going to be the person responsible for the arrangement at the time, make sure they have a copy of this. We made an extra copy for you, just make sure they have it and especially if people have prepaid, make sure they know it’s all prepaid. Make sure they know you already took care of all of this.”
More and more, maybe it’s just because we live in such a financially volatile time right now, it seems to be really important right now that people say, “Make sure you mark that it’s paid, because I want my children to know they don’t have to pay for any of this.”
Rebekah: That’s kind of the sense of pride to that generation our parents had.
John: Never being a burden on your family.
Rebekah: Exactly. I took care of this, I arranged for this, I set money aside so that my children wouldn’t have to pay.
Spending Down Money on Prepaid Cremation Before Going Into a Nursing Home
John: Right, interesting. What if the case where a family member is going into a nursing home, I’ve heard that they can be told to spend down their money and make their funeral arrangements before they go into the nursing home. What does that mean?
Rebekah: Yes. We hear that a lot too. In today’s society we are told that nursing home care is something that is quite expensive. Actually national statistics put the state of Massachusetts somewhere around $9,000-$9,200 a month for the average. That’s one month-
John: One month.
Rebekah: -staying in a nursing home. For example, if your mother or father had $50,000 saved just for the sake of even numbers, at $9,000 a month that’s not even six months.
Rebekah: Usually six months is a cutoff, when you start talking to the nursing home about the potential of your parent being a resident there. They look at what the financial amount is that the person has, how long are they going to be able to pay for their own care, and it’s not long before your money is gone.
What they do is, they say is, “Before your $50,000 is spent completely on being here in this nursing home,” they don’t say in these words, but this is the way I view it is, “We will allow you the dignity of going to the funeral home and paying for your own funeral.”
They suggest you go to the funeral home and a lot of times as part of your application process, because people at that point will apply for, in this state it’s Mass Health that helps pay for their care. A lot of people even without being in nursing home, a lot of younger people or a lot of young families that are starting out that are not financially established yet will have Mass Health to help for medical expenses for their children or even for themselves within certain income levels.
What happens at that point is Mass Health [won’t pay] — and you can certainly understand that they don’t want to approve that they’re going to start paying $9,000 a month for someone’s care when they find out that that person has assets and could be paying for their own. As part of that, they ask you to come to the funeral home, make the funeral arrangements and we provide all of the necessary legal documents that you need and all the documents that Mass Health is looking for, to show what your funeral arrangements are. We have to give an itemization of exactly how much it costs so that nobody is trying to hide money somewhere.
It’s important that the money be placed in an irrevocable account, their keyword is irrevocable, because imagine that they approved someone to be eligible for this financial assistance, for the nursing home stay, they find out that there’s $20,000 in a funeral home account, but it’s not in an irrevocable account, meaning the money is in an account that can be taken out, the money’s in a revocable account. So one of the kids says, “Hey, I’m taking a vacation,” and takes the $20,000 out.
Rebekah: They want to see that it is in an irrevocable account. That’s a good thing, that the person at least is allowed the dignity of paying for their own funeral while they still have some assets.
John: Right, because like you said then, say that six months goes by once you’re in the nursing home, all your money is gone then you’re just paying by way of the Mass Health, Medicaid, things like that, for the nursing home, your money’s gone. At least you know you’ve already made these arrangements, that when you pass away, those arrangements are already taken care of and again, it goes back to that burden. Where you don’t want to be a burden on your family and end up with no money, and then your family has no choice but to pay for these arrangements.
John: That’s great information, Rebekah. Thanks again for speaking with me today.
Rebekah: Okay. Thank you for having me.
John: For more information, you can visit the website at www.bostoncremation.org or call 781-322-0909.