What is Pre-planning, or Pre-arrangement?
When you plan in advance at Millspaugh Camerato, you are making choices now based on your wishes as to how your final arrangements will be carried out.
Preplanning a funeral is undoubtedly one of the biggest and most important decisions you will make in your lifetime. Whether it is for you or a loved one, the first step is obtaining all the necessary information to make an informed decision. Thousands of New Yorkers are choosing to preplan/prepay their funeral and burial expenses. In doing so, they recognize that it is smart financial planning and provides great emotional relief for themselves and their loved ones. Prepaying your funeral will allow you to make your own funeral plans, but, more importantly, preplanning will spare surviving relatives and loved ones from the emotional burden of having to make decisions at a time of great stress and grief.
Laws and regulations differ by state and conflicting information can make it difficult and confusing to make safe and trustworthy decisions about preplanning. NYSFDA is pleased to say without reservation that more than any other state, consumers in New York who prefund their funerals have their money protected by what are truly the strongest laws in the nation.
Schedule a time to meet with the funeral director to explore options. He/she will review the funeral home's General Price List. There are many types of special, personalized services that can be discussed at this time, including music, flowers, memorial donations, the type of service based on personal preferences, and much more.
Once the details have been finalized, the funeral director will prepare a preneed agreement and a fully itemized statement for the consumer to review and sign if satisfied.
If prefunding as well, there may be options for payment. Many people choose to prepay in full; some will arrange payment plans with the funeral director. Either way, the funds will be forwarded within 10 days to an interest-bearing, government backed account in a bank or trust, such as PrePlan, the funeral trust program of the New York State Funeral Directors Association.
Within 30 days, the consumer should receive a deposit acknowledgement in writing indicating where the funds have been placed.
As part of the preplanning process, a consumer may also choose to designate any person over the age of 18 (whether related or not) to make sure their funeral arrangements are carried out as intended. While in no way financially responsible, this individual would have sole legal authority to act on behalf of a decedent strictly on funeral and burial matters. The funeral director can provide additional information, along with the necessary documents to designate an agent.
What do I need to do to prearrange?
At your convenience, you can meet with Bob Gaus or Kris Sopris to discuss your options and your preferences. When you make arrangements in advance, you’ll want to consider your site of choice, the committal service, and the type of permanent memorial. By making some or all of these decisions now, you give your family peace of mind, and also benefit financially.
Funeral prearrangements alleviate the burden on family members to make difficult decisions during a stressful time when they are not best prepared to do so, and provide peace of mind. Many people think of funeral planning as part of their estate planning. Benefits of preplanning include:
- Allows individuals the opportunity to make personal and specific selections for the funeral service that most closely meets their needs;
- Spares loved ones from having to second-guess the wishes of the deceased at the time of need;
- Allows for time to research funeral homes, burial options, and financial considerations;
- Provides an option to set aside funds for final expenses, relieving family members of an unexpected financial burden;
- Medicaid/SSI recipients may set aside money to fund the service of their choice before their funds are exhausted down to necessary eligibility levels.
What are the advantages of advanced planning?
In keeping with their long-standing tradition of caring, funeral directors remain dedicated to helping families cope with end-of-life matters with quiet professionalism and attention to detail. They undergo a rigorous regimen of college-level study in mortuary arts and sciences, and funeral service. Before being licensed by the New York State Department of Health to operate as a funeral director, the aspiring funeral director must pass examinations on funeral directing and the laws, rules and regulations governing funeral directing.
As with many other suppliers of consumer goods and services, the funeral industry is subject to both Federal and State laws. One important regulation to protect consumers is the Federal Trade Commission's Funeral Rule which requires funeral homes to make available a general price list which details the cost of all funeral products and services being considered. Unfortunately, this requirement does not now extend to other providers of funeral goods and/or services such as casket stores, cemeteries and companies selling on the Internet. However, the rule may soon be amended to include these other providers in giving consumers useful information and the appropriate protection, no matter where or how consumers purchase funeral products.
Thanks to legislation passed in New York State in 1993, all funds paid in advance for a funeral must be deposited in an investment backed by the United States government such as FDIC insured certificates of deposit (or a New York State bank). Account statements showing interest earned must be reported annually to the consumer, or within 30 days after the consumer's request. All funds are completely portable to any funeral home anywhere at any time; all funds must be repaid to the consumer upon their request (with the exception of Medicaid recipients). The law also requires that there be no commission, fee or other monetary consideration of any kind paid to a funeral firm or funeral director as a result of where the consumer's dollars are placed in trust.
Although preneed insurance which would allow funeral firms to be named as beneficiaries of dedicated preneed life insurance policies exists in some other states, New York State does not allow this form of payment for funerals -- and for good reason. This type of insurance is usually expensive; does not keep pace with inflation and has few if any protections for consumers' money. For instance, if the purchaser stops paying premiums for preneed insurance, they lose all benefits.
Even though arranging a funeral occurs at a stressful time, the wise consumer should remember to ask questions. Funeral directors expect questions, and are always ready to consult with families as partners to ensure a dignified and appropriate remembrance of a loved one's life.
Special Considerations for Medicaid/SSI Applicants & Recipients
All citizens – regardless of income – are entitled to and deserving of both a proper funeral service and a burial with dignity and respect. In fact, federal and state laws support this guiding principle in a number of ways.
First, any person applying for Medicaid/SSI can set aside funds for the sole purpose of paying their funeral/burial expenses as part of the spend-down process to Medicaid/SSI eligibility. The funeral/burial funds set aside will not be counted as part of the individual's financial resources.
Second, New York State law requires that 100% of these funeral/burial funds be placed in an irrevocable trust account, making certain that they will be available when needed and used for no other purpose than what they were intended. A trust which is titled 'irrevocable' means that any refund or withdrawal, for any purpose, will and must legally be refused by the funeral director and/or funeral trust or financial institution.
An applicant/recipient of Medicaid/SSI may also set aside funds in irrevocable funeral trust accounts for the following immediate family members:
- Parents; and the spouses of these individuals.
Please note that when the original purchaser passes away, the beneficiary (family member) becomes the new purchaser and taxpayer.
If any money is left over in the irrevocable trust after the funeral and burial charges have been paid, it will go to the county where the decedent resided.
Finally, the individual has the right to use any funeral home they choose. The funeral home selection may be changed at any time, for any reason.
A Medicaid/SSI eligible individual must first notify his or her caseworker that funds will be set aside to pay their funeral/burial expenses.
What is the difference between pre-paying and pre-planning?
When you pre-plan, you do not need to pay for everything in advance—your estate can pay for the services at the rates being charged when your funeral is held. When your plan is complete, the funeral director will keep it on file until it is needed. However, if you pre-pay at the time you make your pre-arrangements, you can lock in today’s prices. We offer several affordable payment and investment options. We’ll be happy to discuss these options with you and help you make a decision that best suits your needs.
Many people choose not only to preplan a funeral, but to prefund it as well, either by paying the full amount up front or by arranging a payment plan with the funeral home. Benefits of prefunding a funeral include:
- Placing the cost of the funeral (at today's prices) in an investment vehicle, so that the interest earned will keep pace with inflation to cover the cost of the funeral (at future prices) when the death occurs;
- Prevents life insurance policies from being depleted at the time of a loved one's death;
- Allows individuals to consider options while they are better prepared to make sound, fiscally responsible decisions;
- Spares loved ones the unexpected cost of a funeral during a stressful time;
- Medicaid/SSI applicants and recipients may set aside funds for their funeral expenses in an irrevocable trust, which is considered an excludable asset.
What if the cost of the services/products I pre-pay is greatly increased at the time of my death?
Once you pre-pay for a site on our property, the terms both parties agree to are permanently in effect. For other types of services, the cemetery cannot guarantee that the fund of money established by the purchaser will be sufficient to purchase those services. However, the interest earned by a fully funded account should offset any reasonable price increase.
What if your funeral home is no longer in business at the time of my death?
A frequent question that consumers ask is "What happens if the funeral home closes?"
Fortunately, preneed funds are forwarded to an interest-bearing account with a separate financial institution in the purchaser's name. The purchaser remains in control of those funds at all times.
In the event of a funeral home closing, all accountholders must be notified in writing within 30 days. They may then choose to transfer the funds in their preneed account to another funeral home or, if it is a revocable agreement, they may request a refund of their deposits plus all interest earned.
The New York State Health Department Bureau of Funeral Directing regulates funeral service and closely monitors this process.
Consumer Checklist for Prefunding a Funeral
√ Did you receive a copy of the funeral home's General Price List?
√ Did you receive a copy of the Preneed Agreement and Itemization Statement you signed with the funeral home?
√ Did you receive a Confirmation Statement of the money you left as a deposit within 30 days? Was this deposit sent to the financial institution within 10 days of the date you signed your agreement? Does the name of the depository (financial institution) appear on the confirmation? Was your money placed in an interest-bearing account or government-backed investment, such as United States Treasury Bonds?
√ If you are currently applying for or receiving Medicaid, did you sign an Irrevocable Agreement? By law, you must sign such an agreement, which requires that any money left over after the funeral will be returned to the local Department of Social Services office?
√ When you make additional deposits to your prefunded account, you must receive a confirmation statement of each deposit.
√ Look for an Annual Statement at year-end which will show your activity, including any deposits made and interest earned. This interest must be reported on your annual tax return, similar to interest earnings on a savings account.
What information will I need to provide on the On-line Pre-planning/Pre-arrangement Form?
This easy-to-use form should take only a few minutes to complete and will require contact information, and your site/property and memorialization preferences. You’ll have the option to select services, based on your preferences and the associated costs. View or complete the On-line Pre-arrangement Form now.