Pre-Need Funeral Arrangements - Pros and Cons
Authored By: Legal Hotline for Older Iowans
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There are many advantages to planning and paying for your funeral in advance. Pre-need funeral arrangements let you choose your own funeral services and final disposition. It saves your surviving family or friends from having to make these decisions during the stressful period following your death. It lets you comparison shop and bargain for a good price. Iowa law has a number of provisions that
protect consumers who make pre-need funeral arrangements. For example, Iowa law requires that pre-need contracts:
- be in writing and govern how funds must be deposited;
- give you three business days to change your mind, and cancel without penalty;
- specify the merchandise and services to be provided and list the cost of each item;
show the total purchase price and terms of payment;
- state whether they permit substitution of merchandise;
- include disclosures and be written in clear and understandable language.
Iowa law also requires that sellers of pre-need arrangements keep certain records and make reports to the state. Despite these protections, abuses remain. Problems typically arise when careless or dishonest sellers mishandle, mismanage or embezzle pre-need funds. Consumers should thus be cautious when choosing a funeral home. For example, you should make sure it has a licensed director and a
good reputation in your community. You should also ask the following questions when making arrangements:
- Are you paying a lump sum for the contract, or are you making installment payments? If you are making payments, are they affordable?
- How are the funds secured and invested?
- Is the trust account transferrable if you move?
- Will the contract cover all of the costs of your funeral and is it a guaranteed price contract?
- If you have a trust account, is it revocable, meaning can you withdraw money from it if you need to?
- Will the trust account affect your eligibility for any government benefit programs?
If you receive Medicaid benefits, or may at some time need Medicaid assistance to pay for nursing home or other care, it is important that your trust account arrangement be irrevocable. If you have burial funds in an irrevocable trust account, the funds are an exempt resource and will not affect your eligibility for Medicaid.
If funds remain in an account after payment of funeral expenses, the remaining funds will be disbursed to the purchaser's personal representative, next of kin or
the Department of Human Services if the purchaser was a Medicaid recipient. For additional information, see the Consumer Guide to Funerals on the FTC website at www.ftc.gov or contact the Funeral Consumers Alliance at 800-458-5563 or visit
its website at www.funerals.org