In addition to the overwhelming feeling of loss after the death of a loved one, the financial burden can add extra stress to the grieving family. The National Funeral Directors Association found that the median cost of an adult funeral in 2021 was nearly $8,000.
To prepare for the high costs associated with funerals, you can establish a funeral trust to cover these end-of-life expenses.
What does a funeral trust entail?
When you establish a funeral trust, you typically work with a funeral director to set up this trust. The money stays in your trust until you die. The trustee you name will manage these funds to pay for your funeral expenses. Other related costs can include the following:
- funeral director and officiant fees
- an urn or casket expenses
- burial plot and headstone fees
- death certificate
- your funeral outfit
- obituary fees
What else should I consider?
A disadvantage to consider is that the funeral home may go out of business, thus losing your investment. Certain tax or public benefit implications may also apply to your funeral trust.
Think about your circumstances when deciding whether a funeral trust is appropriate. One factor to consider is your financial situation. For example, if you have limited assets and income, a funeral trust can help ensure that your surviving family members will not have to pay for the cost of your funeral.
Another factor to think about is your age and state of health. Establishing a funeral trust can provide peace of mind if you are older or have a chronic illness. Additionally, if you have specific wishes for your funeral, such as a particular burial or service, this type of trust can help grant your wishes.
Overall, a funeral trust can serve as a helpful tool in planning your estate and end-of-life expenses.