Prepay your funeral for peace of mind

While you’re likely aware of the importance of estate planning, one often overlooked aspect is funeral costs. And few take advantage of the option to prepay their funerals.

If you’re not sure how much a funeral actually costs, you’re not alone.

“I’ve been doing this 14 years, and the majority of people estimate a funeral costs $10,000,” says funeral director Kat Downey. In reality, she’s seen them cost anywhere from $2,000 to $22,000. As with any event, the cost varies widely depending on needs and preferences.

If you want cremation, you still have to choose how to be memorialized. While with burial, there’s a choice of coffin style, wood and lining. You also may have preferences about the music for the service, or the headstone.

These are overwhelming decisions for grieving loved ones. So much so that small tasks become huge obstacles—and guilt and grief tend to escalate prices.

“If funeral directions are in the will, it’s generally read after the funeral,” Downey points out. “They ought to be on file at the funeral home of choice.”

Consider pre-planning, as well as prepaying, for your funeral, using an Eligible Funeral Arrangement (EFA). Some funeral homes and cemeteries will guarantee future costs if you prepay.

An EFA is established with a funeral director or cemetery operator. There is a $15,000 maximum contribution for funeral services only, $20,000 for cemetery services only, and $35,000 for both funeral and cemetery.

Your money is held in trust in your name until you die. Any interest earned on the accumulated funds grows tax-free, unless you cancel the plan. And, it’s protected by an insurance underwriter up to $100,000.

Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.