Many clients are meticulous about planning out what will happen to their assets for decades after they are gone from this earth. But it can be harder to plan what happens in the immediate aftermath of their death: their funeral and the disposal of their remains. Those can be difficult conversations to have, both with their family and with their financial advisors.
But they are very important to have long before they become necessary. No one wants their grieving family to also have to suddenly plan and pay for a funeral. Here are five of the tricky decisions a client needs to make long before they get elderly.
(1) Decide how the funeral will be paid for. Any estate plan should include provisions that address payment for the client's funeral. Options include a life insurance policy made payable to an irrevocable trust to avoid estate taxes on the proceeds, or setting up a separate bank account just for that purpose. An estate attorney can advise you, based on your circumstances. Include your intentions in your will or trust documents.
Prepaid funeral plans have become popular and may seem to make things easy on the heirs, but they can have their drawbacks. The client may move and end up wishing to be buried in some other place. If the client survives for a long time after paying for the funeral, the funeral home could go out of business.
(2) Leave written instructions for how the funeral will be conducted.
If the client doesn't write down his or her funeral wishes, it's possible that individual state laws will determine who gets to make the decision for you. Most states follow this order:
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Spouse
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Children
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Parents
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Next of kin
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Public administrator designated by a court
This can be a huge problem if, for example, the children disagree about what should happen, or if there is some other trusted person the clients thinks should be making these decisions. Putting the client's wishes in writing solves all those problems.
