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Concerns about burdening surviving family members with headaches and expenses lead many retirees to think about funeral pre-planning. If you pay attention to life insurance television ads targeted at retirees, you can see several life insurance sales pitches that prey upon those concerns. Like many other retiree financial planning issues (such as, for example, reverse mortgages), retiree-focused television ads signal issues that are much more complex than television ads indicate.

We have seen the costs of funeral goods and services rise during our quarter century of trust and estate practice. A 2015 news release on the National Funeral Directors Association (NFDA) website confirmed our observations that “Over the past decade, the median cost of an adult funeral in the United States has increased 28.6 percent.” So, does that mean all retirees should prepay funeral expenses or buy life insurance policies to cover funeral costs? We offer our favorite response to that kind of general question: “it depends.”

A counter-balancing trend appears in our observations of some people choosing cremation instead of traditional funerals. The 2015 NFDA news release indicates that funeral costs are only slightly higher than cremation costs if the two alternatives differ only in burial versus cremation. Families that replace embalming, public viewing, and other funeral traditions with celebration of life memorial events in churches and other environments, may reduce the cost of goods and services by 36% or more compared to traditional funeral arrangements (based on funeral and cremation cost figures published in the 2015 NFDA news release).

People that wonder about life insurance policies promoted in television ads by celebrities like Alex Trebek, the host of the TV game show “Jeopardy!,” should read the common sense MarketWatch.com article entitled, Stupid Investment of the Week.

People that wonder whether they should purchase life insurance from more reputable insurance companies to pay funeral costs should ask these questions of their funeral directors, their investment advisors, and themselves:

  1. What are the goods and services cost differences between traditional funerals and no-frills cremations?
  2. How do investment expenditures differ between a life insurance plan and a non-life insurance investment plan to have enough money to pay funeral or cremation costs?
  3. Would existing money in the checking account or investments be enough to pay reasonable funeral or cremation costs?

Many problems arise when people prepay funeral expenses without consulting with an elder law attorney. We cautioned married couples against prepaying funeral expenses without an elder law attorney’s advice in our article, “Spouses of Nursing Home Residents: Don’t Let Nonlawyers Apply for Medicaid!” Members of the Indiana chapter of the National Academy of Elder Law Attorneys have strong concerns about people transferring sizable life insurance policies to funeral homes without competent legal advice because those transfers may trigger terrible results for nursing home residents under Medicaid law.

Funeral planning is an important part of estate planning. Beyond the financial issues that we have already mentioned in this article, we have also written about the related emotional and spiritual issues in our articles, “Spiritual Issues in Final Illness, Death, and Human Remains Disposition” and “Plans for Final Illness, Death, and Human Remains Disposition.” Therefore, we encourage people to include funeral planning as an essential part of the estate planning process under the advice and assistance of an experienced trust, estate, and elder law attorney.

Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation;  a member of the Illinois State Bar Association and the Indiana Association of Mediators; and he was the 2014-15 President of the Indiana State Bar Association.

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