Many people use their estate plan to detail their wishes for their funeral. It’s also wise to make sure that there’s enough money for whatever kind of send-off you’ve chosen. Whether you prefer a small, family-only gathering or a rousing party, it’s likely going to cost far more than you might imagine. The median cost of a funeral these days is over $7,000.
That’s money that your loved ones will have to pay shortly after your death. Therefore, including funds for your funeral in your will won’t help them. It will likely be months before your estate goes through probate (even if it’s a short one) and is settled.
So what are your options? Let’s look at a few.
A payable-on-death (POD) or joint account
If you have a POD account, your designated beneficiary will get access upon proof of your death. Therefore, if you include money in a POD account for your funeral expenses, they can access it as soon as they have your death certificate.
Another alternative is opening a joint savings account with a close family member and placing the money in that. Remember, however, that this person will have access to those funds while you’re still alive. If you choose to do this, be sure your co-owner can be trusted not to withdraw the money for their own purposes.
Life insurance
You can make sure that any life insurance policy you have includes enough money for your funeral expenses. These policies pay out shortly after someone dies – although not immediately. If you designate a life insurance beneficiary to pay for your funeral, it could still be weeks before your beneficiary gets the policy payout to reimburse them for what they paid.
There are many other options. For example, most funeral homes offer prepaid funeral plans. The important thing is to be sure that the money is available when your loved ones need it. Also, make sure they know how to get it. This way, they don’t have to put the expenses on their credit cards, dig into their savings or ask friends and family for donations.