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One aspect of estate planning that isn’t always covered is the ability to make your funeral arrangements in advance. Of course, for many people it can be difficult to think about their mortality. Indeed, it’s not surprising to learn that many put off planning their own funerals. Unfortunately, this lack of planning may result in emotional turmoil for surviving family members when someone dies unexpectedly.

Also, a death in the family may cause unintended financial consequences. Why not take matters out of your heirs’ hands? By planning ahead, as much as it may be disconcerting, you can remove this future burden from your loved ones.

What are your wishes?

First, make your funeral wishes known to other family members. This typically includes instructions about where you’re to be buried or cremated, if you prefer a formal or religious ceremony, and even the clothing you’ll be buried in.

Your instructions may also cover a memorial service in lieu of, or supplementing, a funeral. If you don’t have a next of kin or would prefer someone else to be in charge of funeral arrangements, you can appoint another representative.

Be aware that the methods for expressing these wishes vary from state to state. With our help you can include a provision in your will, language in a health care proxy or power of attorney, or a separate form specifically designed for communicating your funeral arrangements.

Whichever method you use, it should, at a minimum, state 1) whether you prefer burial or cremation, 2) where you wish to be buried or have your ashes interred or scattered (and any other special instructions), and 3) the person you’d like to be responsible for making these arrangements. Some people also request a specific funeral home.

Should you consider a prepaid funeral?

There’s a division of opinion in the financial community as to whether you should prepay funeral expenses. If you prepay and opt for a “guaranteed plan,” you lock in the prices for the arrangements, no matter how high fees may escalate before death. With a “nonguaranteed plan,” prices aren’t locked in, but the prepayment accumulates interest that may be put toward any rising costs.

When weighing whether to use a prepaid plan, the Federal Trade Commission recommends that you ask the following questions:

• What happens to the money you’ve prepaid?
• What happens to the interest income on prepayments placed in a trust account?
• Are you protected if the funeral provider goes out of business?

Before signing off on a prepaid plan, learn whether there’s a cancellation clause to the plan in the event you change your mind.

What is a POD bank account?

One alternative that avoids the pitfalls of prepaid plans is to let your family know your desired arrangements and set aside funds in a payable-on-death (POD) bank account. Simply name the person who will handle your funeral arrangements as beneficiary. When you die, he or she will gain immediate access to the funds in that account without the need for probate.

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