Home About Archives RSS Feed

The Independent Investor: Should You Bury Yourself?

By Bill Schmick
iBerkshires columnist
In today's world, the idea that you should prepay, or at least set aside some money to cover your funeral expenses is gaining traction. Given the escalating costs of paying for a loved one's funeral, it is no surprise.
 
Most of us don't want to face it, let alone discuss it. In some quarters, it is "bad mojo" to consider planning for your death, so pardon me for bringing up such a squeamish (some might say ghoulish) subject.  But as your fiduciary in all things financial, I feel obligated to discuss prepaid funeral expenses.
 
This year, I was introduced to this concept when my Mom died. She was 93 years old, bless her soul, and had a good life. Independent to the end, she secretly arranged for her own funeral expenses in 2000 along with specific instructions on what should happen at her passing. She wanted no fuss, no bother. Her remains were cremated, and everything was signed, sealed and delivered before I could make the five-hour trip to her home in Pennsylvania.
 
My mother turned out to be an astute investor when it came to her death. Funeral expenses during that time (2000-2018) increased by 75.74 percent, according to the U.S. Bureau of Labor Statistics. Her arrangement to prepay her expenses protected her from rising costs and provided a convenient and stress-free experience for me and the rest of the family.
 
However, there are pros and cons of pre-paying for your funeral. A prepaid funeral plan is an arrangement between you and a funeral home in which you make an upfront payment to the funeral home today. The agreement should state that the funeral home will administer funeral services in the future in return and cover all the costs. These funeral costs usually run somewhere between $10,000-$15,000 for basic services. They usually do not pay for cash expenses such as fees charged by the clergy or other services.
 
If you go this route, make sure the services and costs you specify are guaranteed in the contract. Watch out for terms such as additional payments for "final expense funding." It usually means that your beneficiaries will be required to pay any cost overruns.
 
There are other risks you take as well. For example, the funeral home may go out of business. What happens to your contract at that point? Have arrangements been made for another entity to take over your contract? What happens if you decide to move for example? Can your plan be transferred to another funeral home in a different state? Can you get your money back if you change your mind?  Make sure that all of these "what ifs" are spelled out.
 
Some experts argue that there are better ways to pay ahead for your funeral. You could buy a life insurance policy with the proceeds earmarked for funeral expenses. Some suggest that you could also set up your own burial trust fund.  It's called a "Totten trust" and is simply a regular bank account with a designated "pay on death" inheritor.
 
In this case, you open the account at your local bank or credit union. The money earns interest, you can close it at any time if you want, and could transfer the balance to a different bank if you want. When you die, the beneficiary collects the account balance and pays for the funeral.
 
Granted, prepaying your expenses via a funeral home is convenient and can insulate your costs from inflation if it is done right. Ask your financial planner what she thinks at your next meeting. It could not only provide you peace of mind but could also be a great gift to your beneficiaries.
 
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $400 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
 

 

0 Comments
     

Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
Clinton Church Restoration Hires Project Architects
Pittsfield Eyes Development of Pickleball Courts at Springside Park
Lawsuit Accuses Wayfair of Misleading Investors
Adams Planning Board Continues Solar Array Hearing
North Adams Airport Building to Be Moved This Week
North Adams Schools Will Hire Full-Time Business Administrator
Mount Greylock Grad Barrett Earns Regional Honor at Westfield State
Farley-Bouvier Preps For New Legislative Session
McCann Tech Drone Program Taking Off
Lanesborough Considering Leasing Space at American Legion

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (278)
Independent Investor (378)
Archives:
January 2019 (2)
January 2018 (3)
December 2018 (4)
November 2018 (9)
October 2018 (5)
September 2018 (4)
August 2018 (9)
July 2018 (2)
June 2018 (8)
May 2018 (8)
April 2018 (7)
March 2018 (6)
February 2018 (7)
Tags:
Crisis Europe Euro Wall Street Markets Economy Stock Market Interest Rates Oil Selloff Debt Ceiling Taxes Deficit Metals Housing Congress Retirement Currency Jobs Election Fiscal Cliff Banks Pullback Greece Recession Europe Debt Federal Reserve Energy Bailout Stocks Japan Commodities Stimulus Rally
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Will the Municipal Bond Massacre Continue?
Recent Entries:
@theMarket: Markets Bounce 10 Percent Since Christmas
The Independent Investor: Changes to Social Security and Medicare Benefits
@theMarket: The Trump Dump
The Independent Investor: The Fed Stands Tall
@theMarket: The Market's Winter Storm
The Independent Investor: Will Our Country's Military Win the Next War?
@theMarket: Markets Hope for Trade Breakthrough
The Independent Investor: Sustainability Investing and Millennials
@theMarket: It Is a Black Friday on Wall Street
The Independent Investor: The Origin of Black Friday