Pre-Need Burial and Funeral Contracts
||John had told his daughter that he had pre-paid for his funeral and his burial and the contracts would take care of everything. When he died, however, his daughter found out that neither contract paid for interment, which cost an additional $795 for the grave site alone.
Many people today choose to plan ahead for funerals and other final arrangements, making informed decisions in advance about burial and cremation and memorials. Many also put aside the funds to pay for these arrangements in a variety of fiscal instruments - trusts, insurance, and other accounts.
But more and more Michigan consumers, especially the elderly, are receiving direct mail and telemarketing calls from sellers of pre-need funeral goods - cemetery lots, urns and caskets - and pressed to pay in advance for goods and services they may not need or use in the future.
Michigan's Prepaid Funeral Contract Funding Act permits anyone to sell funeral goods and services on a pre-arranged basis, as long as they register as a seller with the State of Michigan. The providers of these goods and services are not all the same. For instance, funeral directors in Michigan are tested, regulated and inspected by the state. Pre-need sellers do not have to be similarly licensed. If you decide you would like to pay in advance for funeral goods and services make sure your money is safe and will be there when the need arises. Laws safeguarding your money may vary based upon the funeral goods or services being sold. Consumers are encouraged by the Attorney General's office to obtain a written explanation of exactly how their money is protected in each transaction, and importantly, whether the pre-need contract is guaranteed, revocable, refundable, transferable and portable.
The Attorney General's Office, the Federal Trade Commission, AARP, ABC News and Consumers Reports have each done recent investigations into the sale of funeral goods and services. Consumers are entitled to good information upon which to base sensible decisions about funerals before or when or after the need arises. But they should not be pressured to pay in advance for merchandise or services they may not need. Nor should they be targeted for high-pressure marketing and sales schemes. The Federal Trade Commission's publication "Funerals: A Consumer Guide" details the requirements of federal law and provides a more comprehensive overview. The publication is available from the FTC by calling 1-877-382-4357; TDD: 1-202-326-2502 or online at: http://www.ftc.gov/bcp/edu/pubs/consumer/products/pro19.shtm
Before signing any pre-need contract or paying for anything in advance, consumers should consider the following questions:
- What are you are paying for? Are you buying only merchandise, like a casket and vault, or are you purchasing funeral services as well? Who will eventually provide the services and merchandise you are purchasing?
- Who are you dealing with? A licensed funeral director? A cemetery sales person? A commissioned pre-need seller? Who owns the firm? How long have they been in business?
- What happens to the money you've prepaid?
- What happens to the interest income on money that is prepaid and put into a trust account?
- Are you protected if the firm you dealt with goes out of business?
- Can you cancel the contract and get a full refund if you change your mind?
- What happens if you move to a different area or die while away from home? Some prepaid funeral plans can be transferred, but often at an added cost.
- Are these arrangements portable, transferable, and refundable without penalty?
- Have you consulted your family, your religious, spiritual, and financial advisors?
- Are you feeling "pressured" or hurried to make these arrangements or buy something before you really need it? If so, by whom?
Another resource you may wish to contact is:
601 E Street NW
Washington, DC 20049
AARP is a nonprofit, nonpartisan organization dedicated to helping older Americans achieve lives of independence, dignity and purpose. Its publication, "Preplanning Your Funeral Arrangements," is available free online or by contacting AARP.