Why prepay the funeral?

Most advisors don’t know the cost of a funeral.

“I’ve been doing this 14 years, and every financial person says a funeral costs $10,000,” says funeral director Kat Downey. She’s seen them cost anywhere from $2,000 to $22,000. So encourage clients to find out their options.

If clients want cremation, they still have to choose how to be memorialized. For burial, there’s a choice of coffin style, wood and lining. What about the music for the service? The headstone?

These are overwhelming decisions for grieving loved ones. Small tasks can 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.”

So encourage clients to pre-plan, as well as prepay, their funerals, using an Eligible Funeral Arrangement (EFA). “That makes it easier for their children,” says Downey. Some funeral homes and cemeteries will guarantee future costs if clients 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.

The money is held in trust in the purchaser’s name until he dies. Any interest earned on the accumulated funds grows tax-free, unless the client cancels the plan. It’s protected by an insurance underwriter up to $100,000.

What you need to register a death

• Full legal name as it appears on the birth certificate
• Birth date and place
• Death date and place
• Spouse’s name, even if deceased, if applicable
• Maiden name, if applicable
• Parents’ names and birthplaces
• Social insurance number

Once loved ones get death certificates from a funeral home, have them ask for at least 25 originals (most homes only provide 10). The certificates are required for everything from registering for the CPP death benefit to closing a bank account.

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.