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3 ways to pay for your funeral

On Behalf of | Sep 8, 2020 | Estate Planning |

Paying for your funeral is probably not something you have on your mind a lot. But when it comes to estate planning, it is important to consider every checkpoint—including the immediate weeks after your death.

Grieving a loved one is stressful and taking care of these expenses beforehand may help alleviate further stress from financial worries. There are several ways to tackle this topic.

Payable-on-death account

Many banks or credit unions have options to help you invest money into these sorts of accounts so that, at death, it goes to a particular beneficiary. One benefit of this option is that you may access any funds you invest while alive.

Funeral insurance

As Bankrate describes, insurance companies may offer policies between $5,000 and $30,000 that explicitly payout to funeral expenses or other medical debt.

Funeral trusts

A funeral trust is a resource that, depending on how you create it, may help you and your family before and after your death. These trusts often come with details describing your funeral and any funeral services you may want including embalming, cremation or burial plots.

The revocable trust option of this is an agreement you make with the funeral home where you have a lot more control over the funds and the contract. You have the option to break the contract and get most of what you invested back.

The irrevocable trust option means that you have much less control over the money in the fund, but it also means that money does not count towards your assets when determining benefits like Medicaid.

Each of these options has its pros and cons and each involves complicated agreements you may want to communicate with your loved ones and other resources if you consider investing in one of them.