14 Tips if you don’t have enough money for a funeral
Losing a loved one is always sad, and it’s an emotional time for everyone involved. But, it can be even harder if you also have the financial stress of taking care of the funeral. According to the National Funeral Directors Association, the median funeral cost in 2017 was $7.360 (for funeral, viewing, and burial) and $8,755 if you include a vault. Even with Cremation (which is less expensive), the median cost is $6,260. This can vary greatly based on services included and the area of the country. Here on Long Island, and the NYC metro area, everything tends to cost more.
These days, more and more people are having challenges affording these costs, so I wanted to provide some advice on how to weather the storm. And, of course, with inflation, the costs tend to increase each year.
Before I get started, let me just cover 3 important items that everybody needs to know when it comes to paying for a funeral. Then, I will cover some tips and solutions if you are tight on cash and may not be able to afford one.
Who pays for the funeral?
First, the cost for the funeral and burial is supposed to be covered by the estate (not family members). This, of course, assumes that an estate has money/assets to pay for this, and clearly this isn’t always the case (I will share advice later in the article if the estate doesn’t have funds for this). These costs are typically paid out of the estate’s assets during the probate process and BEFORE the remaining inheritance is distributed to the beneficiaries.
Know your rights when it comes to funeral homes
It’s important for you to know your rights as a consumer. In addition to the emotional stress, many people may be facing family disputes and financial stress at the same time. This may cause many to rush into making hasty decisions which often result in unnecessary costs, and some funeral directors may take advantage of this. This, of course, can lead to more financial stress later.
This is why the FTC enacted the Funeral Rule to protect consumers. This allows the customer to pick and choose only the goods and services that you need. You are entitled to see a written and itemized price list. It allows you to compare prices among funeral homes. You are also entitled to get prices over the phone (if you ask for them) and without the need to provide your name, phone number or address. You are also allowed to purchase a casket or urn elsewhere and have the funeral home use that. You can read your full right here.
The Funeral Consumer Alliance has a lot of helpful guidance including how to choose a funeral home, tips for saving money on the funeral, and funeral planning. They are there to help protect the consumer. They understand that it’s an emotional and stressful time, so they act as a guide and watch dog for the industry.
How and when do you pay for the funeral…and how does it work when the estate is under probate? How do you pay for it before the inheritance is distributed?
Now, this is the tricky part. Most funeral homes require payment up front. (There are a few that will offer installment plans, but the majority don’t). And, the cost of the funeral/burial is supposed to be covered by the estate…BUT, the estate usually can’t foot the bill during the first week due to legal processes (i.e. probate).
Here’s how it works. If someone dies with a Will, there is an Executor named in the Will, and that person is responsible for settling and distributing the estate (all aspects of it e.g. assets, debts, administrative costs, etc.) and then distributing the remaining inheritance.
That person needs to be sworn in by the Probate Court. (Often this happens in the 1st week or two). Then, the Executor sets up a separate tax ID and bank account for the Estate. And, then all assets flow into that account, and all expenses are paid by that account (not by individuals, family members, etc.). At that point, ALL bills are paid from this account (and they should not be paid in any other way).
Things need to be handled following the legal probate process, and you can read more about that in this article: 18 Executor responsibilities. This article explains the key responsibilities that Executors have. And, this companion article covers the 8 Most common Executor Mistakes and how to avoid them. (Note: If someone dies without a Will, there is a similar process that is followed, but the Executor is called an Administrator).
But, here’s the challenge…the funeral usually has to be paid for in the 1st week, and the new estate bank account often is set up until 2 weeks or more. So, how is this handled?
Usually, either the Executor or family member (i.e. someone who will be a beneficiary) temporarily foots the bill. Then, the Estate pays that person back once the probate process is underway and assets are in the account and authorized by the Court (following the state’s probate process).
Sometimes, this is a quick process if the decedent has money in their bank account and/or plenty of liquid assets. But, if there are no liquid assets and the assets are tied up in a house, it may take a while to sell the house so that this money can be recovered. Each estate is different and the order of payments can differ state by state, but as a general rule, expenses related to funeral/burial are one of the first expenses to be paid. (See priority of payments for New York State here). If the Estate has no assets, then this can be a real problem for families.
So, there may be two types of challenges when it comes to paying for the funeral:
1) A family doesn’t have money to pay for the bill up front, but they will get the money later (when the assets of estate are distributed). So, they need to find a temporary solution.
2) The estate has no assets/very low assets and also the family doesn’t have enough money to pay.
Both of these situations can be stressful (and confusing). So, I’ve put together a list of 14 tips to help grieving family members who may find themselves in this difficult and uncomfortable situation.
14 Tips when you can’t afford a funeral
When someone dies, it’s a terribly emotional time for family members and friends. But, it shouldn’t lead to financial turmoil as well.
If you are having challenges paying for the funeral (or finding the money until the assets from the estate distributed), here’s some advice to help solve the costs. Some of these may provide you with sources of funding and others provide tips on cost reduction.
1. Life Insurance
Determine whether the person had a life insurance policy, and if so, whether the funeral and burial costs are covered under the plan. If the deceased had a life insurance policy, those assets can be transferred and liquidated right away (without the need to pass through the long probate process).
Consult with an agent (over the phone) to review the details of the policy and its limitations and stipulations so that you understand what’s covered and what’s not. All policies differ. You may find that a good percent of the costs are covered.
If the person was still working for a company, check with the employer, as some employers (especially larger ones) provide this to their employees. Some people have individual insurance policies.
2. See if the person had a “Payable on Death account”
If the person did some estate planning, especially if they consulted an estate attorney or have a Will, they may have established a Payable on Death account. This is set up for this very purpose…so that your loved ones have immediate assets to pay for the funeral, burial and/or any other immediate costs.
The bulk of the estate, typically goes through the Probate process and therefore, there are delays for when the assets are distributed. Some of the assets may take a while to be released (sometimes months). This Payable on Death account bypasses the process so that there are no delays. This helps pay for the funeral expenses and/or other immediate costs that the Executor may need.
3. Plan a budget and stick to it
Look at your budget first to understand what you can reasonably afford. And be sure to choose an affordable plan. Don’t be pressured to spend more due to suggestions from others (e.g. funeral homes, family/friends). Do not disclose your finances to the funeral director. Do what makes sense for you and don’t overspend.
4. Burial Cost options
Cremating is usually less expensive than burying someone in a casket or vault. There are many options available when deciding what to do for burial. Don’t be convinced to spend more than available or more than the decedent would have wanted. (Note: New York state does not require embalming, but some states and some funeral homes require it for certain services (e.g. open casket, interstate transportation).
5. Shop around
You can shop around to see the costs for funeral parlors and services so that you can compare services. And, remember that you can customize the services/offerings you want (and don’t want). Do not feel obligated to accept packages if they aren’t right for you. Pick and choose.
6. Ask family and/or friends to chip in
Be candid and upfront with them. Let them know the costs. (Most people don’t realize how expensive it is). Ask how much they can reasonably afford. Keep a budget and keep track of how much each person contributed. (Pending on the situation, you may want to pay them back at a later point in time if that is feasible).
7. Check with the person’s employer (or union) to see if there are survivor benefits
Some companies offer survivor benefits for the spouse and/or family of the deceased. Also some unions offer benefits that may pay a portion.
8. Veteran’s Benefits
All eligible veterans are entitled to a burial at a National cemetery with no charge for a headstone, grave site, vault and internment. The family is responsible for other charges. Veteran’s spouses and dependents are also entitled to the same benefits.
9. Social Security
Surviving spouses can receive a death benefit of $255 from the Social Security Administration. It’s not a lot, but every drop counts.
10. Medicaid and Social Services Departments
Some states help those receiving medicaid, supplemental income or social security disability. These amounts are also typically small, but if you’re having difficulty, every bit will help.
11. Victim’s Assistance
Some states help families of accident or homicide victims with funeral expenses via their victim compensation programs. New York State pays up to $6,000 for the funeral of a homicide victim.
Some churches/temples/houses of worship, businesses, clubs or other groups sometimes help raise money to defray funeral costs. You could also try crowdfunding sites.
13. Borrow/get a loan
This really should be done as a last resort, and you should think twice before you go into debt for this. Most traditional lenders are reluctant to offer these types of loans. But, some do this through funeral homes. Bear in mind that these types of loans tend to have much higher interest rates vs a traditional loan.
14. As a last resort, contact the county coroner’s office for assistance
If you simply can’t afford to pay for a burial, and you’ve explored other options, you can sign a release form at the county coroner’s office stating that you can’t afford to bury the family member. The county and state will pitch in to either cremate or bury the body.
Unfortunately, when many people pass away, their family struggles to afford funeral and burial costs. Knowing your options can help relieve some of the stress and heartache for others during this especially difficult time of grieving. If you’ve been through this experience yourself, you know it’s not fun, so if you plan ahead with the learning here, it may help your heirs avoid this extra stress.
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Related articles for inherited property on Long Island:
- Next steps after a family member dies
- How to sell an inherited home to settle an estate
- 18 Important Executor duties
- 8 Most common mistakes Executors make and how to avoid them
- 7 Things that may surprise you if you inherit a home
- Supplies needed to clean out a parent’s home
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