2017-09-14 / Living

Navigating the waters of funeral trusts

Discussing end-of-life issues can be an emotional experience. Making decisions upon the death of a loved one can be challenging, especially if the wishes of the deceased are murky or unknown. Funeral trusts often help families avoid making decisions at times when their emotions may make such decisions more difficult.

What is preplanning a funeral?

Preplanning a funeral can save family and friends from having to make difficult decisions. It also enables people to choose their burial space, services and transportation. Preplanning also allows people to pay for or arrange payment for their funeral costs ahead of time. According to Consumer Protection Ontario, a person can preplan a funeral without prepaying. However, many people prefer to have all financial components in place as well for maximum convenience.

What is a funeral trust?

Funeral trust can be a smart investment for people who have not spelled out their wishes in a will or conveyed them in writing to someone who will be managing their estate.

Funeral trusts may be referred to as revocable or irrevocable. An irrevocable funeral trust, or IFT, is a tool people who are facing the high cost of skilled nursing care can consider. An IFT establishes an account into which money for funeral expenses is deposited. The money cannot be withdrawn or refunded, and funds must be used for funeral expenses.

In the United States, an IFT is often considered an eligible expense during the social services spend-down process. That means the money deposited in the trust is exempt as a countable asset from any financial look-back period that helps determine eligibility for government healthcare services, such as Medicaid.

Revocable funeral trusts can be cancelled. According to the National Care Planning Council, a revocable trust can be created by anyone and, at a later date, can be dissolved by the person who originally created it.

Various organizations oversee the investment and management of prepaid funeral trust accounts.

When is a trust unnecessary?

In certain instances, a funeral trust will not be needed. Those who have the means to fund longterm care services and will not need assistance later in life may not want their money locked up in a trust. Others opt for life insurance policies to pay for funeral needs.

Assistance with funeral trusts

Funeral homes may work directly with companies that manage funeral funds. Speak with a funeral director if you want to learn more about trusts. Trusts also can be established by working with an elder care attorney or with a funeral trust agency.

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