The money was gone. The funeral industry charges mourners inflated prices. Recognising the risk, state governments decided it would be safer if funeral directors had to hand over money received for prepaid funeral arrangements to a reliable third party.
Gradually, over the past few decades, Victoria , Tasmania , SA , NSW and Queensland have brought in laws requiring funeral providers to place the payments with a regulated fund. Of course, a law can be broken — and O'Brien Family Funerals broke it.
Keith's payments were never transferred to a funeral fund. In another case, South Australian funeral director Robin Knight cashed in the prepaid plans of customers by lodging fake claims of their deaths. He was sentenced in to four-and-a-half years in prison. Debra Petrys' parents were two of his clients. When her mother died the same year Knight was jailed, the family had to pay the full price again for her funeral.
There are certain advantages to prepaid funerals, which lock in the current price at the time you sign up. This generally means that the further in advance you take out a plan, the bigger your saving. In our survey of people who recently organised a funeral, one respondent wrote that "everything was vastly cheaper" for their father's prepaid funeral "because you are in a position to shop around".
Prepaid funerals can also appeal to people who want to dictate their own funeral arrangements, and the marketing for them plays on this desire for control. None of us can necessarily control the circumstances of our death — it can happen at any time — but we can control what happens afterwards. At least, that's the idea we're sold.
In a radio ad for Christian Funerals, a commanding voice urges listeners to lock in a prepaid funeral to "plan the funeral you want and take the emotional burden away from your family". Another, for Hiram Philp Funerals, insists that getting a prepaid plan with them "removes the financial burden from your family and ensures your wishes are honoured". WT Howard Funerals claims it wants to help you "make your funeral the way you want".
These are just a few of the plus ads for funeral plans on Australian airwaves most days. Many of them, like the examples above, are from the country's two largest funeral companies, InvoCare and Propel. These ads sell the idea that your funeral is, essentially, about you: in other words, tailor your ceremony to your liking and, in the process, relieve your family of a burden.
Prepaid funerals can appeal to people who want to dictate their own funeral arrangements, and the marketing for them plays on this desire for control. At this point, a bigger question emerges: what is a funeral for, anyway? Some would answer that it's a therapeutic ritual. But is it meant to comfort the dying or the grieving?
Dianne McKissock, a co-founder of the Bereavement Care Centre, says most people want to be involved in arranging a loved one's funeral because it enables them to express their feelings for, and relationship with, the person who has died — an important first step in learning how to live with their death.
Prepaid plans hinge on the idea that, by transferring the "burden" of our funeral to a funeral director, we're doing our family a favour. But, in the process, we also transfer control of the funeral away from the family, which can sometimes cause them distress. Even InvoCare encourages its Guardian Plan customers to leave some elements for loved ones to organise later, purportedly to give them a "meaningful role in planning your funeral".
This means the earnings on customers' investments go directly to InvoCare, and if the funds don't meet the cost of the services laid out in your contract when you die, the company will cover the difference. That may sound generous, but the flipside is that if the investment has grown to be greater than the cost of the funeral, InvoCare gets to pocket the surplus — a scenario the company is banking on.
And if any items in your prepaid contract go unused at the time of the funeral, you can't get a refund or even swap them for other funeral products or services. You also can't use any surplus funds from your investment to pay for additional aspects of the funeral. A number of participants in our funeral survey say they were caught off guard by extra charges that weren't covered by their loved ones' prepaid contracts.
It was all very uncomfortable. This brings us to a pitfall of prepaid plans that's more common than the well-documented risk of theft or funeral-insurance traps — feeling stuck with a contract that doesn't serve you. When a door-to-door salesperson signed Beverley up to the fund in , she thought she would get a casket, a hearse, a car and one transferral of her body. That being said, there are a number of reasons why you should not prepay your funeral expenses, but I'll only cover three big ones.
Your money is better off in the bank: When you stash money in a savings account, it won't earn much interest, but at least it will earn some. More importantly, the bank that you put your funds in is safe and secure, and your deposits are protected by FDIC insurance.
You enjoy neither of those assurances when you put your money in a prepaid funeral plan. While there are some legal guidelines as to how the funeral industry can handle and invest funds prepaid for expenses, your money is safer staying in your bank account earning interest than being in the funeral home's pocket. Funeral homes can go out of business: If the funeral home mismanaged your prepaid funds for whatever reason and was unable to cover agreed upon funeral expenses, you would not have an easy time recovering those funds.
Speaking of mismanagement of funds, if your chosen funeral home goes out of business, in most cases there is no guarantee that your funds will be returned to you. Once you make your prepayment to the funeral home, those funds cannot be transferred to another funeral home because the original plan is specific to that funeral home.
Worse yet, if they declare bankruptcy, you will be standing in a long line to get your money back and may only receive cents on the dollar, if anything. There is often no provision for relocation: Because prepaid funeral plans cannot be transferred between different funeral homes, coordinating funeral services for those who have relocated would mean that prepaid funds for funeral expenses could be lost if it were decided to have services held elsewhere.
This situation can arise when services are held in an area where someone decided to relocate to. Unless explicitly stated within the agreement, there is generally no provision to transfer prepaid funds in the event of relocation. You may think you will never move, but you never know what lies ahead! Smarter ways to pay in advance First of all, you should ensure that any existing life insurance policies have the correct beneficiary information -- and that your beneficiaries know they are beneficiaries.
Individuals may not need to go to the extent of prepaying and preplanning, she says, but they should let their wishes be known to family members, at the very least, to avoid future conflict. Preplanning and prefunding ensure funeral wishes — particularly elaborate plans — actually take place, Mr. Sweryd adds. More baby boomers are going this route for this reason. Some plan parties instead of a traditional service.
One even involved a tropical-themed affair at a restaurant with margaritas served for guests — the favourite drink of the deceased, he says. Yet, following those rites can involve additional costs, including fees for services at a church or temple. Funerals for larger, blended families, however, can create more potential for conflict. Preplanning and prepayment can help avoid that, he adds. Murton says.
As Mr. Prepaid funerals It is possible, if you are so inclined, to choose the funeral home long before you need it, and even to pay for all or part of the home's services years in advance. Also consider these questions: What if you change your mind? Can you get all or part of your money back?
Will your money earn interest? If so, how much? Who gets it? Does your health affect the terms of the plan?
A better way to pay ahead A prepaid plan like the ones described above can be a convenient and reassuring way to spare your family some measure of emotional stress when the time comes: The big decisions about your funeral will have been made, the money paid, and that will be that. Most Popular. Tax Breaks. February 25, Investing for Income. Fidelity funds are renowned for their managers' stock-picking prowess. We rate Fidelity's best actively managed funds that are popular in k plans….
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