Keeping Funeral Costs Affordable

LONDON - JUNE 16:  A coffin is placed in a 200 year old horse drawn hearse at F. A. Albin & Sons funeral home on June 16, 200
LONDON - JUNE 16: A coffin is placed in a 200 year old horse drawn hearse at F. A. Albin & Sons funeral home on June 16, 2006 in London, England. Despite the rising costs of funerals and popularity of cremations, the UK funeral industry reports that victorian-style funerals are becoming more popular. (Photo by Scott Barbour/Getty Images)

Anyone who's put a loved one to rest knows that death is not cheap. According to the National Funeral Directors Association, the average adult funeral cost $6,560 in 2009 (their most current data). That doesn't even include such common add-ons as a cemetery plot, headstone, flowers, obituaries and limousine, which can add thousands to the bill.

Because death is a frequently avoided topic, many people aren't armed in advance with information about the many variables -- and costs -- involved in planning a funeral. Thus, just when survivors are grieving and most vulnerable, they're bombarded by decisions that must be made quickly, often without even knowing what their loved one would have wanted.

The key message for the living is to decide on your preferred funeral arrangements ahead of time and to convey those wishes to your family -- ideally through discussion and in your will.

Another important lesson: Know your legal rights and what funeral-related goods and services cost so you -- or your survivors -- don't feel pressured into buying things you don't want or need. The Federal Trade Commission (FTC) oversees what is commonly known as
, which regulates how funeral providers must deal with consumers. Among its provisions:
  • Upon request, funeral homes must provide an itemized price list of all their goods and services, whether you call (even anonymously) or visit in person.
  • You have the right to choose among their offerings (with certain state-mandated exceptions) and are not required to purchase package deals containing unwanted items.
  • Prior to purchasing a casket or outer burial container from a funeral home, they must share descriptions and prices before showing you stock on hand -- that way you'll know whether less expensive alternatives are available.
  • You have the right to purchase certain items, such as caskets and cremation urns, from outside vendors; and by law, the funeral home cannot assess handling fees.
  • Providers that offer cremations must make alternative containers (besides caskets) available.
  • You can't be charged for embalming procedures you didn't authorize, unless they're required by state or local law (in most cases, direct cremation, immediate burial or refrigeration are acceptable alternatives).
  • Note: The Funeral Rule does not apply to third-party sellers such as casket and monument dealers, or to cemeteries that lack an on-site funeral home.
If your religious or personal beliefs don't require that specific funeral protocols or traditions be followed, here are a few ways you can reduce costs while still honoring your deceased loved ones and their survivors:
  • Veterans, their immediate family members, those who served on active duty in the Commissioned Corps of the U.S. Public Health Service, and certain civilians who've provided military-related service may be entitled to burial at a national cemetery with a grave marker. Burial for eligible individuals is free, but families are responsible for funeral home expenses and transportation to the cemetery. Click here for details.
  • A $255 lump-sum death benefit that can be used for funeral expenses is available to surviving spouses or minor children of eligible workers who paid into Social Security.
  • For many, cremation is a viable, less expensive option to burial, even with the same funeral services, since caskets often cost thousands of dollars. If you plan to hold a viewing first before the cremation, ask the funeral home if you can rent an attractive casket for the ceremony.
  • Some families prefer not to hold a public viewing. For them, "direct cremation" or "immediate burial" may make sense. Because the body is promptly cremated or interred, embalming and cosmetology services are not necessary, which saves hundreds of dollars. Also, with direct cremation you can opt for an unfinished wood coffin or heavy cardboard enclosure for the journey to the crematorium.
  • You can purchase a casket or cremation urn from a source other than your funeral home, such as another funeral home, a local casket store or an online outlet -- often for far less money.
  • Many people choose to donate their body to science as a way to advance medical science. Organizations are forbidden by law from paying for donated bodies; however, many programs will pay for transporting the body and final cremation. For a list of body donation programs in the U.S., click here. Also, check out the Anatomy Gifts Registry for additional information on whole-body or organ donation.

Preplanning vs. prepaying. If you're comfortable doing so, preplanning your own funeral arrangements can help ease your family's burden. By researching and visiting a few providers, you'll have a better idea of what's available and what things cost.

Some people also opt to prepay their arrangements, but the FTC advises caution and recommends you ask potential funeral home candidates:
  • What happens to money and interest earned that you've prepaid?
  • Are prices locked in, or can they change due to inflation?
  • Are you protected if the firm goes out of business?
  • Can you cancel the contract and be reimbursed if you change your mind?
  • Can the prepaid plan be transferred if you move elsewhere?

As an alternative to prepaying, you may open a Totten Trust, which is a type of bank or credit union savings account. You control the account during your lifetime; then, when you die, the funds are immediately available to whomever you designated as beneficiary. The money can be used for such things as funeral arrangements, without being delayed by probate.

The FTC's website offers a wealth of helpful information regarding funerals. Another great resource is the Funeral Consumers Alliance, a nonprofit organization dedicated to protecting a consumer's right to choose a meaningful, affordable funeral. One particularly useful tool is their state-by-state guide to funeral consumer rights.

The death of a loved one is always upsetting, but you may be able to ease your family's emotional and financial burdens by planning ahead.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.

To participate in a free, online Financial Literacy and Education Summit on April 17, 2013, go to Practical Money Skills for Life.