Couldn’t have said it better myself. That’s why I became a public advocate.

All the best,

Robert E. Wilhelm III
The Guardian of Funds Foundation

The best advice I give clients is to spend a little time examining funeral prices and options in their area. Doing so does two things:

1. it prepares them for the financial impact of death
2. it provides a natural starting point for discussing the emotional factors of death

Most people simply do not know enough about funerals to talk about them. However, once they gain a basic “funeral education” they find it MUCH easier to discuss, and make, appropriate financial, emotional, and spiritual plans.

Unfortunately, there isn’t a lot of objective funeral information out there. Most funeral information comes from funeral directors themselves and tends to be slanted towards supporting the goal of selling a family a large, expensive funeral.

Most funerals are expensive…but they don’t have to be.

Why do you think I figured out a way to do pre-needs better, honestly, less expensively and then turned on the industry?

Robert E. Wilhelm III
The Guardian of Funds Foundation
A Non-Profit Corporation

All I can tell you is that FCA keeps its eyes open to consumer complaints and laws in all the states. Most prepaid guaranteed-price contracts we see do indeed allow the funeral home to collect any overage in the account above the retail, at-death price of the funeral. In most cases I’ve seen, the written agreement stipulates that the funeral home - not the beneficiary or the family - has the right to collect the money from the trust account once the funeral home has sent the bank or insurance company a claim form stating the funeral was performed as contracted. I recognize that your experience has been different, but I am being honest and accurate about what FCA sees in the majority of cases nationwide.

I’m glad that you’ve never heard the horror stories of preneed gone wrong. That doesn’t surprise me, since you obviously run an honest business. But please understand that these situations can and do happen, frequently. Your experience at your jobs doesn’t capture what we as a national organization hear from citizens around the country every year. I’m not discounting your experience, only asking you to understand we’re being honest when we talk about what we see nationally, not just in MD and CA. The greatest number of complaints in our office, proportionally, are about preneed contracts.

To be fair, some of them come from the consumer’s own misunderstanding. The problem with the phrase “it’s all taken care of” is that when Mom tells her kids that, she usually fails to explain that cash advance items - as you rightly pointed out - can’t be guaranteed by the funeral home. So, the kids are angry and lash out unfairly at the funeral director because Mom gave them false expectations. Both funeral homes and funeral consumers have a responsibility to discuss information and contract terms in full detail, and share them with all interested parties.

You’re correct that a prepaid funeral can be useful to shelter assets from a Medicaid spend-down. That’s the one time we advise consumers to explore the possibility. But to my mind, this is merely a taxpayer-funded funeral. Why? Because Medicaid is agreeing to let you keep $1,800 to $10,000 or more (depending on the state) to pay for your funeral, instead of reimbursing the state for your Medicaid/nursing home expenses. We, the taxpayers, end up footing the bill. Reasonable people can differ on whether this is a legitimate method, but those are the facts.

Thanks for the good conversation.

what they can’t cover is sales tax, singers, musicians, police escorts, public transportation (airfare, for example), cost of disposition permits (per the state). these are all known as “third party costs”.

I am aware of many things having been in the business. But I’m afraid you may not be as informed as you think you are. You say,

“Also, those who prepay often pay *more*. Yes, that’s right. Here’s how it works. When you buy a “price-guaranteed” funeral, you sign a contract that allows the funeral home to collect all the money in your account at the time of death. In exchange, the funeral home agrees not to charge you more.”

The funeral home itself - at least in Maryland and California - does not ever “collect” the money in an account. That is illegal. The funeral industry - as a whole - wants to enroll the money in insurance and have it paid for over time which - as I have hitherto pointed out - allows them to charge finance charges which they call “cost of insurance” for a particular pre-arrangement plan. The money is released to the beneficiary of the insurance policy (usually the spouse or, if widowed, a child or next of kin). This is spelled out per state departments of insurance. For a funeral home to “collect” all the money in the account would be a violation of the law. The beneficiary of the policy is paid, and then they in turn pay the funeral home. On Trust Accounts it is the same. There is a specified beneficiary of the Trust itself. By law, at least in Maryland & CA, the funeral home may not be the beneficiary on either. As far as the figures you cite, I don’t know where you’re getting them. You seem to be pulling them out of the air. It all depends on the company issuing the policy and the policy itself or the rate of interest on the Trust Account which will vary. To make a blanket statement that the funeral home runs off with “x” amount of dollars shows is incredibly vague and without support. Who says a funeral has to cost $10,000? No one I’ve ever heard of. The choices are left up to the family. Whatever they want - and how they want it - is how it should be.

I am not here - in any way - to defend the funeral industry. On the contrary, I have turned on them for the egregious way they prey on people, in the way of finance charges, cancellation costs, shoddy service, and pushy salespeople. I’m crusading for common sense and - having personally helped families make pre-arrangements - I can tell you I’ve heard families say they’re sorry for not making them, but I’ve never heard a family say they were sorry they did make them. I’ve heard children, brothers, and sisters say they were glad their relative had what “they” wanted. I - personally or professionally - have never heard or experienced any family “disaster” you speak of because someone decided to pre-arrange. Quite the contrary, I’ve met with families who’s relative’s prolonged sickness - or MediCal - has exhausted their resources and don’t know how they’re going to pay for final disposition. Often, they have to choose cremation simply because it is less expensive, even if they don’t want it. The thought of their loved one being burned is incredibly hurtful to them.

And families should be aware of super cheap cremations as well. I can tell you horror stories on those. Maybe that’s a topic for another day.

All the best.

Mr. Wilhelm, you gave some good advice, but there are dangers to prepaying that you may not be aware of. You wrote:

“to be clear on this, in pre-paying funeral expenses, a family is locking in today’s price for the future, i.e. they are protected against any further price increases. that in and of itself is a very good thing, because today’s average funeral (nationally) is about $6000 (for a burial) and to put that expense off onto the survivors can be an extreme burden both financially and emotionally”

Actually, no consumer organization (AARP, Consumer Reports, Consumer Federation of America, Funeral Consumers Alliance) recommends prepaying. In fact, all of these organizations recommend against it except in rare circumstances.

Why?

1. State laws are a hodge podge. Some states protect prepaid money well, other states allow what amounts to legalized robbery by letting the funeral home skim up to 30 percent of the consumer’s initial payment and all the interest.

2. If something sounds too good to be true, it is. “Locking in today’s price”, though it sounds so attractive, is one of those things. The world doesn’t work that way. There are up to 20 items that cannot be price-guaranteed in a funeral, which causes great confusion for survivors. Plus, what if the casket you picked out isn’t available at the time of death. . will you have to pay more?

Also, those who prepay often pay *more*. Yes, that’s right. Here’s how it works. When you buy a “price-guaranteed” funeral, you sign a contract that allows the funeral home to collect all the money in your account at the time of death. In exchange, the funeral home agrees not to charge you more. The following example shows what a bad financial deal this is:

A. Mrs. Smith prepays $6,000 today to Jones Funeral Home for a full funeral. It’s a price-guaranteed contract. Jones deposits Mrs. Smith’s money in the bank, and lets it accrue interest (or it might be an insurance policy).

B. Mrs. Smith dies 10 years later. Her son calls Jones Funeral Home. They perform the funeral as contracted, and don’t ask the family for any more money. They just collect what’s in Mrs. Smith’s account.

BUT-

C. The price of a full funeral at the time of Mrs. Smith’s death has risen from the original $6,000 to a cost of $8,000 when she dies. That’s the price a customer would pay walking in off the street. But Mrs. Smith’s money accrued interest all those years, and it’s now worth $9,000.

D. The funeral home gets the whole $9,000. So, Mrs. Smith (or her estate) actually paid $1,000 more by prepaying than she would have if the funeral had been paid at the time of death. Not so great, huh?

Now, funeral directors will object and say “but we also take the risk and eat the difference if our prices rise faster than the account grows.” This is true, but it’s unlikely. Most consumers’ accounts will have enough in them at the time of death to cover the inflated cost, and there’s often a surplus. If that weren’t true, the funeral home would go out of business because it would be giving away funerals. Just like a casino, the customer can “win,” but the deck is stacked in favor of the house and the house makes off with a double profit far more often.

Planning in advance for your funeral is crucial, but paying for it ahead of time is usually a mistake. Thoughtful price comparisons ahead of time can save you a great deal of money (most people are scared into prepaying because they don’t know a funeral doesn’t *have* to cost $10,000). Be sure to share your wishes in writing with your family - they need those tools to carry out your funeral. Paying ahead of time and telling the kids “everything’s taken care of” isn’t helping them, it’s setting them up for confusion and potential disaster.

I hope this helps.

Joshua Slocum
Executive Director
Funeral Consumers Alliance

to be clear on this, in pre-paying funeral expenses, a family is locking in today’s price for the future, i.e. they are protected against any further price increases. that in and of itself is a very good thing, because today’s average funeral (nationally) is about $6000 (for a burial) and to put that expense off onto the survivors can be an extreme burden both financially and emotionally. but then you ask, “if I make pre-arrangements how do I know the people I’m talking to are reputable?” you have to check them out. you must know who you are dealing with. find out where is the money going? into what bank are the deposits made? do i get a monthly statement? what happens if your company goes out of business? check them out. ask around. do your homework. moreover, everything should be itemized, i.e. “broken down” for clear understanding. never be left with questions. feel free to ask anything. remember, this is your money and your loved ones. you can’t ever be too careful.

when it comes to the funeral industry, “what you don’t know” can really hurt you. get educated. it’s tough because it’s not a subject people like talking about. there are so many misconceptions.

hope that helps.