Planning a Funeral: What Are the Financial Decisions You Need to Make?

Key Points

  • Whenever possible, it’s best to include funeral arrangements and wishes in your estate planning.

  • It’s important to comparison shop among funeral providers to get the best prices.

  • It pays to be informed about your options, including the fact that you can buy services and goods from entities other than funeral providers.

Dear Carrie,

I just watched my best friend experience the death of her mother. Not only did she suffer a loss but the process of making funeral arrangements seemed more difficult and costly than they needed to be. What is your advice for other families going through this? A Reader

Dear Reader,

First of all, let me say how sorry I am for your friend’s loss. Losing a parent is never easy and I know that it’s difficult making big financial decisions when you feel vulnerable and grief-stricken. Funeral arrangements are especially tricky because you often have to make dozens of decisions in a short period of time.

I also know that death is a subject most of us would rather avoid. But it really is important to talk about because the more you know, the more you’ll be able to honor a family member without spending more than you can afford.

The truth is, funerals can be a major expense. According to the funeral-pricing site Parting.com, the average funeral now costs $10,000, including funeral home fees, a casket, cemetery plot and the cost of opening and closing the grave. The costs can go even higher.

I know that there are a lot of good people working in the funeral industry, but there are also a few unscrupulous ones who try to take advantage of family members’ grief. They might, for example, show you an expensive mahogany casket before showing a simpler, less expensive one, and suggest “I know you’d want only the best for your mother.” Or they might recommend embalming even if you are not planning a public viewing (which is not necessary and not legally required in most states.)

I hate hearing about unscrupulous practices like these. But you don’t have to fall for them. I have a few suggestions to help you wisely navigate after a loss.

If possible, plan ahead

In the best of all worlds, you—or a loved one—will have included funeral arrangement wishes in your estate planning. That can save a lot of guessing, and money, for the people you leave behind. You’ll want to let family members know, for example, whether you wish to be cremated (the least expensive option) or prefer a traditional burial with public viewing (the most costly choice). If there is a place you want to be buried, be sure to include that. There are also options you might not have considered, such as a “green burial,” in which remains are allowed to break down naturally and become part of the earth, or a home funeral; you can explore these by researching online.

Put your preferences in writing and give copies to your family members and attorney. Don’t put them in your will, however; a will is often not found or read until after a funeral.

Be sure to ask family members what they want, too. “In my experience, the decedent may say, ‘Oh, it doesn’t need to be much of a bother,’” says Craig Tregillus, franchise rule coordinator for the Federal Trade Commission (FTC), which oversees the funeral industry, “but family members may need an opportunity to grieve and get past the loss.”

You might want to visit a local funeral home and make arrangements in advance. I’d use caution in prepaying for their services, however. If you move somewhere else, you may not be able to get a refund. And, according to Tregillus, the FTC has uncovered several scandals in which funeral homes have taken off entirely with funds designated to cover a loss.

If you decide it makes sense to prepay a funeral, however, make sure that your loved ones know about it. If your survivors are unaware of the contract or don’t understand how it works, your money could easily be wasted.

It pays to shop around.

Whether you’re able to plan ahead or not, it’s important to comparison shop when planning a funeral. It’s easier than you might think. In 1984, the FTC enacted the Funeral Rule, which requires funeral homes to give you prices over the phone or hand you an itemized price list when you visit in person (they’re not yet required to post them online.) If you don’t know what to ask, check out the FTC’s handy guide, “Funeral Costs and Pricing Checklist,” which provides a list of questions for when you call around. One thing I’d suggest is never stating your budget up front; you might be able to plan a funeral for much less.

There may also be an advantage to shopping at smaller, independently owned funeral homes. “By and large,” says Tregillus, “they have lower costs for consumers.”

Another thing that many people don’t know is that you’re not legally required to purchase all your goods and services from your funeral provider. A number of big box and online retailers, for example, sell caskets and urns online for considerably less than what you might find in a funeral home, and can usually ship to a mortuary overnight.

Final Thoughts

As I said before, I know that most of us don’t really want to talk—or even think—about death. But death is a part of life. And your friend’s experience shows how important it is to be informed and make savvy financial decisions even when you’re grieving a loss. With a little planning, funerals and memorials don’t have to be expensive. A funeral plan that reflects your personal preferences and provides guidelines for those who are left behind can grant peace of mind for them—and you.

Have a personal finance question? Email us ataskcarrie@schwab.com. Carrie cannot respond to questions directly, but your topic may be considered for a future article. For Schwab account questions and general inquiries,contact Schwab.

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