Planning one’s own funeral is not the most pleasant topic to think about but there can be important benefits for you and your family to do so:
One, you can spare your loved ones the burden of making choices at a difficult time. Losing a loved one is difficult for anyone to go through but it is made harder when at a time of grief, family members are required to engage in a complex and expensive transaction such as planning a funeral and disposition of remains of a loved one. By making your own arrangements in advance, you can do so when the crisis of loss and grief is not happening at that moment. You can also make sure that arrangements are being made the way you want and avoid situations where members of your family may be in conflict with each other over what you would have wanted.
Two, cost savings. We have learned from contacts at one of the major established funeral home organizations in our region, Donohue Funeral Homes, Inc. that when family members plan the funeral, they tend to spend more than if the person had planned their own funeral since often family members feel a sense of obligation to honor their deceased loved one with more elaborate arrangements. On the other hand, when people plan their own funeral, they tend to opt for less expensive options to avoid imposing those costs on their family. Many funeral homes also offer the option to lock in today’s prices and options to make payments over time. By law, the funeral home does not hold the money paid but instead it a third-party entity as a trustee holds the funds. This provides protection in case the funeral establishment were to ever go out of business and also the option to change to a different funeral home – for example if you move to another city or state.
Three, helping with planning for possible nursing home admission. A large portion of the population of persons who require nursing home admission eventually need to apply to Medicaid for payment of their nursing home costs. Medicaid is a program which funds healthcare costs for those who have almost no assets – often for paying for nursing homes but also for other forms of services such as in-home care. For a single person applying for Medicaid or a married person whose spouse is not applying, the current asset limit is just $2,000.00. There are various rules about the means allowed to “spend down” to reach that limit. The American Council on Aging has a concise summary of asset and income eligibility limits you can review by clicking here. One of the permitted ways to reduce assets down to the limit is to pre-pay for your funeral and disposition of your remains. Pre-arranging and pre-paying for these expenses brings you closer to meeting the eligibility requirements for Medicaid and at the same time reducing or eliminating future expense for your family.
Four, deduction on the Pennsylvania inheritance tax is preserved. Pennsylvania is one of the few states that has an inheritance tax – a tax on the net value of a person’s estate and other assets after deducting the debts and expenses of the estate. One important deduction on the inheritance tax is the cost of the funeral and disposition of remains. Fortunately, even if you pre-pay your funeral and related expenses today, that expense can still be deducted on the inheritance tax that would be filed in the future.
This list of benefits is not necessarily exhaustive but it does show that there are some real benefits to pre-planning one’s funeral as part of an overall estate plan.