Pre-arranging your funeral

No one likes to think about his or her own funeral. But by doing so early, you can spare your family some very difficult decisions and, possibly, save some money for your estate in the process.

The need for funeral planning is “not something that you can hammer into people,” says Gerri Monsees, registrar of the Saskatchewan Funeral and Cremation Services Council. “Most people don’t want to hear anything about funerals. It’s unfortunate, because when it hits home, they don’t know what to do.”

If you want to pre-arrange your funeral, start by contacting a local funeral home. Funeral homes are licensed by provincial boards or councils across the country. This licence ensures that the funeral director understands all the legislation governing funerals in the province, and authorizes the funeral home’s staff to sell funeral services, including pre-arranged ones.

The funeral director will outline the various products and services that you can pre-arrange. These may include the funeral director’s services, embalming, transportation, visitation facilities, a ceremony and a casket. Most funeral homes offer ceremonies for all religious denominations, as well as nodenominational ceremonies. Rules for the services covered by prepayment differ in each province. In Ontario, for instance, funeral homes can accept funds for cremation, but they cannot accept prepayment for interments.

Visit several funeral homes to compare services and prices – and to find a place where you think your family would be comfortable. This is one of the key advantages to arranging a funeral in advance – you can take the time to shop around. If you leave it to your family to arrange later, they will be grief stricken and rushed, so it will be hard for them to make thoughtful, informed decisions.

Because you may feel a bit emotional yourself during your meetings with funeral directors, you might want to take a family member or close friend along for support, advises Monsees. “It’s always good to have someone there with you, so that if you become overcome, there is someone there to help,” she says.

Once you have decided the type of service you would like to have, you can simply leave a record of your preferences with the funeral home and state that your estate will pay the costs at time of death. Or you can take advantage of an increasingly popular option and pre-pay for all or part of your funeral.

There are two types of pre-payment arrangements: guaranteed and not guaranteed. In a guaranteed contract, you pay a certain amount for a specified list of products and services, and the funeral home guarantees that price until the date of your funeral.

One of the best benefits is it locks in today’s prices, so it’s a hedge against inflation. To get this benefit, you may need to pay the entire fee in a lump sum, although some funeral homes will let you pay for a guaranteed contract in instalments.

In a non-guaranteed contract (sometimes called a deposit contract), you set aside money for funeral expenses, either all at once or in instalments. However, the funeral home does not guarantee that that amount will cover the costs. These contracts are often used for expenses outside the funeral home’s control, such as the costs of flowers, newspaper notices and clergy honorariums.

Whatever kind of contract you choose, make sure the products and services covered are itemized in detail.

According to the Board of Funeral Services of Ontario, average funeral costs in Canada, as of 2003, include $3,350 for funeral services, $2,820 for the casket and $1,203 for a vault, plus cemetery or crematorium costs. Prices can vary substantially, depending on the products and services chosen. For example, you can buy a simple particleboard casket for just a few hundred dollars or you can pull out all the stops for a metal casket costing several thousand dollars.

When you pay for a funeral in advance, the funeral home places your money in a trust, which is covered by the Canada Deposit Insurance Corporation. That money is not part of the funeral home’s operating funds, so even if the company goes bankrupt, your money is safe..

The money also earns interest. Under the Income Tax Act, that interest is tax exempt if the amount of your prepayment is $15,000 or less. (If you pre-pay your cemetery or crematorium services as well, the combined limit is $35,000.) Rules governing the interest vary from province to province. In Ontario, for example, the funeral home must refund any excess interest to the estate.

When negotiating a prepaid funeral, find out whether the funeral home will let you cancel the contract or transfer it to another funeral home.

A funeral home should let you cancel the contract, although it will probably deduct a percentage of the money you’ve invested to cover the costs of administering the contract to that date. (Read the fine print closely; in British Columbia, for example, a funeral home can deduct up to 20 per cent of the contract’s value.) Also, if you withdraw, the funeral home will issue you a T5, and you will need to pay income tax on the accumulated interest.

If you move to a different city or province, you may wish to transfer your contract to another funeral home. This is usually possible – but not always. In some provinces, such as Saskatchewan, provincial legislation requires funeral directors across the province to honour each other’s contracts. In some other provinces, funeral directors have a sort of “gentlemen’s agreement” to do so. To be certain you can transfer your contract, work with a company that has branches across the country or with one of the members of the Canadian Independent Group of Funeral Homes, an organization that represents more than 500 independently owned and operated funeral homes from across Canada.

Bear in mind, though, that different funeral homes offer different products and services. So even if you transfer the contract, the new home may need to make some substitutions, although the funeral director will generally try to adhere to your wishes as closely as possible.

Pre-arranging your funeral does not, however, oblige your family or your executor to follow your requests. Either of them can override your wishes after you pass on. To avoid such a problem, discuss your funeral arrangements with your family and your executor when you make them. Ensure they agree with your wishes, and give them copies of the funeral contract. Don’t leave the only copy of the contract in your safe deposit box. Banks usually deny access to those boxes until a death certificate has been issued, but your family will need to see the funeral contract quickly when it comes time to make the final arrangements.

If you decide to pre-arrange your funeral, you won’t be alone. In a study conducted for the Funeral Profession Coalition Council of Canada, almost eight in 10 Canadians agreed that pre-arranging a funeral was a smart idea.

Funeral insurance
Instead of prepaying your funeral through a funeral home trust, you can also buy funeral-specific life insurance. This option may be attractive if you don’t have enough money set aside for a large lump-sum payment since payments for pre-paid funerals are typically amortized over a short period, up to 60 months, which can mean large monthly payments. Insurance premiums, by contrast, are usually paid over a much longer time, with significantly smaller monthly payments.

As well, pre-paid funeral plans pay only for the funeral and may not cover additional expenses such as the cemetery plot, the preparation of that plot, and obituaries in the newspaper. There may be more flexibility with insurance, which can be structured to make payouts to cover any type of funeral and pay any remaining funds to the estate.

Death Inc.
Death is big business in Canada and, as competition among funeral providers heats up, consumers face greater choice in an increasingly complex industry. Funerals are regulated at the provincial level, and in some jurisdictions, for example, the incursion of new players in a booming industry has raised questions about consumer protection. The following tips could help make the difficult job of pre-planning a funeral just a little easier:

• Get an itemized list that details how much you’re paying for each service and product. By law, in many jurisdictions, price lists must be made available to the public at no charge and with no obligation. If you’re considering a package of funeral services and products, consider what components you really want or need.

• Don’t be pressured by aggressive sales tactics. When you agree to the arrangements, you should receive a written contract.

• Consider getting the help of a memorial society. These non-profit groups, which exist in most provinces, help their members negotiate simple, economical funerals with funeral homes. To find a memorial society near you, look in your local Yellow Pages under “Funerals.”

• Complain if you are unable to resolve a problem with, or feel you’re being treated unfairly by, a funeral establishment. In Ontario, for example, the self-governing Board of Funeral Services oversees the industry and administers The Funeral Directors and Establishments Act, including offering recourse to dissatisfied consumers through its complaint process.

• Even if you don’t preplan your funeral, make your wishes known to your loved ones. The job will be a lot easier for them if they know your preferences.

For information about the CARP-recommended Everest Funeral Plan, go to or call 1-866-400-4944.

The Ontario Funeral Service Association has produced two free booklets to help you plan ahead: To Make It Easier (an estate record booklet) and The Time to Plan a Funeral. Please check with your local funeral home to see if they have copies of the pamphlets.

Laura Byrne Paquet has written for more than 70 publications in Canada, the U.S. and Europe.