Prepaid Funeral Arrangements

Written by: Lauren Ferraro, CFP ®, CPC, CPFA, AIF^®, Senior Wealth Manager

In recent years, prepaid funeral arrangements have become popular. While end-of-life decisions are often a difficult conversation to discuss with loved ones, setting aside money for these types of expenses so that your loved ones do not have the financial burden can be helpful. The key is understanding how prepaid funeral policies work and what the benefits and drawbacks are.

Most prepaid funeral plans include cremation or burial, an urn or casket, and a burial plot with the option of adding on additional items such as visitation and cemetery services.

With a prepaid funeral, you pay while you are living.  This is something you would set up directly with the funeral home.  You would discuss the pre-payment plan as well as review and select any funeral preferences.  The funeral home would then discuss the full payment of your selections and plan with your choice of paying a lump sum or gradually over 3-10 years. 

While the main benefits are sparing loved ones from stressful decisions while grieving and potentially saving money, this approach has some important downsides to consider.  For example, the funeral home or cemetery could go out of business, thus forfeiting the money you spent for the prepaid expenses.  Also, most prepaid funeral plans will not transfer to another funeral home, so if the family moves or a more desirable location is selected, the family may be at a loss. These downside risks are important to consider before choosing to go down this path.  If you are considering a prepaid funeral arrangement, carefully read the contract and its stipulations or limitations to understand the details. 

Our general belief is that most families do not need to prepay for their funeral expenses.  According to a 2023 study by the National Funeral Directors Association, the average cost of a funeral is $8,300.  Setting aside funds in your portfolio to pay for these expenses will help alleviate financial concerns for your family or friends without purchasing a prepaid plan.

We feel what is most important is preparation, not prepayment.  Having conversations with your loved ones about your end-of-life wishes, preferences, and requests, while you are living, is valuable.  Prepare with your loved ones so they can understand your desires and plan accordingly.

As always, please don’t hesitate to contact your team here at Wheelhouse if you have any questions about this topic or other aspects of your financial future. 

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