Having to bury a loved one is one of the hardest things you will ever do.
It is an emotional time, and it can also be confusing. That is why many people choose to pre-plan, but that can sometimes lead to additional heartbreak.
Dozens of families lost tens of thousands of dollars to a Berrien Springs funeral home owner who pocketed pre-paid funeral money.
Matthew Purchase was charged with taking more than $260,000 and was eventually sentenced to prison.
Many families never got their money back.
Pre-planning helps you avoid making rushed decisions and allows you to shop around without time constraints.
However, unfamiliarity with the funeral industry can leave consumers vulnerable to fraudulent schemes that range from overpaying for goods and services to the embezzlement of prepaid funds.
The national average cost of a funeral is about $6,600 dollars, but some cost thousands more.
On average, consumers spend nearly $2,300 for the casket alone.
Angie Hicks of Angie’s List says, "Many consumers will go to the same funeral home that their family has gone to because they have experience, and they know what to expect, but funerals are expensive, so it is good to shop around to make sure you are getting the best price possible."
Other costs include vaults, embalming, cremation, funeral staff and facilities, transportation for the deceased and family.
You can even buy programs and note cards, tribute videos, and online memorials from some funeral homes.
That is why many people pre-pay.
"Many funeral homes offer an opportunity to pre-pay your funeral fees, but if you're going to do that, you need to make sure that there's protection against that funeral home going out of business. Is there insurance that's provided? Can those funds be transferred to another funeral home, because the last thing you want to do is spend that money and find out it's no longer there."
There is always the rare possibility of getting ripped off.
"Unfortunately, scams do happen in the funeral industry, and it's unfortunate because it's a time when consumers are very stressed and very emotional, but they need to be good shoppers, too. We've heard situations where consumers have overpaid for services, as well as embezzlement of pre-paid funeral funds."
While most funeral homes run legitimate pre-paid service plans, there is a growing trend to simply save for a funeral on your own, rather than giving the money to the funeral home.
Kathleen Hartman, a certified financial planner, says, "I think an easier and more flexible thing would be to put the money, and I think it's a very nice thing to want to pay for that ahead of time, just put the money in a checking or savings account and simply add what's called a POD. It stands for Payable on Death Designation. There is a form that your bank or credit union would have, you fill out and have it paid to the person then who will be taking care of these arrangements after your death. All they have to do is show a death certificate, and they'll get the money right away and can carry out your wishes whatever they are."
In 1984, the Federal Trade Commission established the Funeral Rule, which is designed to protect consumers by requiring funeral providers to give adequate information about their services.
This includes things like an itemized price list over the phone or in person.
If you live in Indiana and get ripped off, it is one of nine states that has a fund to protect consumers when pre-paid funds are stolen or if the funeral home goes out of business.
That is not the case in Michigan
A nationwide Angie's List poll found:
• 51 percent of Angie's List members in a recent poll have never planned a funeral;
• Of those who have, 19 percent say the experience was a poor one.
• 53 percent consider family tradition and reputation the most important factors in choosing a funeral provider.
In 1984, the Federal Trade Commission established the Funeral Rule, which is designed to protect consumers by requiring funeral providers to give adequate information about their services:
1. Give an itemized price list over the phone or in person.
2. Let you choose only the goods and services you want (with some exceptions).
3. Disclose on the price list if state or local law requires you to buy any item.
4. Handle without charge a casket or urn you bought elsewhere.1. Obtain your permission for embalming services and disclose in writing that they're not required by law (except in special cases).
Angie's List is the nation's premier provider of local consumer reviews including funeral homes.
Angie's List tips for pre-planning a funeral:
• Talk to your family about your wishes and write down a plan: Do you want a traditional burial or cremation? Do you want a simple or elaborate funeral? Share your ideas with family and put all your wishes in writing.
• Know your rights - shop around: According the FTC's "Funeral Rule" you have the right to stop in any funeral home and request a General Price List (GPL). Visit several funeral homes and use the lists to compare prices. If a funeral home says you have to buy a certain kind of casket, urn, etc. ask why and find out the law or regulation that requires it.
• Pre-paying for a funeral: Be very cautious if you decide to pre-pay for services with a funeral home - ask what happens to your money if you want to transfer the funds to a different funeral home or if the funeral home you've selected goes out of business. Only nine states have funds that step in to protect consumers when funds are stolen or if the funeral service goes out of business. (FL, IN, Iowa, MO, NC, OR Texas, VT and WV) If you choose to pre-pay now, a better option is to put that money in a checking or savings account and add a POD - payable on death designation. Your bank or credit union will have you fill out a form and have it paid to the person who will be taking care of the arrangements. Talk to a certified financial planner about the best plan for you.
• Licensing is mandatory for funeral directors nationwide: You can confirm a funeral director's license by checking with the licensing board in your state. Requirements vary from state to state, but most call for individuals to be at least 21 years old, have two years of education that include mortuary science, serve a one-year apprenticeship and pass an exam.
• Schedule a meeting with the funeral director: Take this time to ask the director your questions (including services/costs) to help gauge if they would be a good company for you to use.
• Unhappy with a funeral home? If you have a problem, it's best to try to resolve it first with the funeral director. If you are still having issues, file a complaint with the Federal Trade Commission (FTC).