This article explains why you may want to pre-pay for your funeral, how to do so, and considerations if you apply for MassHealth long-term care benefits in the future.
There are benefits to pre-paying your funeral costs. First, and perhaps most importantly, it ensures that your wishes are honored. In a pre-need funeral contract, you specify whether you want to be buried or cremated, and choose your urn or casket. You can also select the prayer cards to provide to mourners, in which newspaper to public your obituary, and other services that are meaningful to you. Pre-paying your funeral costs can also ease the emotional and financial burden for your loved ones. A funeral can cost between $10,000 and $20,000. Knowing that you have already paid for this expense can provide you peace of mind that such a responsibility is not left to your loved ones, and provide your loved ones with time to mourn rather than focus on the task of arranging a funeral. Pre-need funeral contracts also provide the option to lock in the prices, as they are likely to increase in the future.
There are two ways to pre-pay for funeral costs: pre-need funeral contracts and a burial bank account. A pre-need funeral contract is made with the funeral home of your choice. The contract can be paid with cash, which is placed in a funeral trust account until death, or through a pre-need insurance policy, which pays out to the funeral home upon your death. You may also open a burial bank account with a bank of your choosing. You should name a trusted loved one as a joint owner on the account so that they have immediate access to the funds upon your death rather than having to probate the account, which can take months.
Funeral contracts and burial accounts are useful tools when spending down assets to meet MassHealth’s financial eligibility rules. To abide by MassHealth’s rules, the pre-need funeral contract must be irrevocable and cannot pay for goods or services that is not typically provided by a funeral home. For example, the contract can pay to provide embalming and order death certificates, but it cannot pay for flowers for the ceremony or for the church services. The burial account cannot be funded with more than $1,500, in order to be deemed a non-countable asset for MassHealth purposes.
If you have a general probate, MassHealth, or estate planning question that you would like answered in a future article, please feel free to call 508.860.1542 or email eganley@miricklaw.com with your question.
