Planning Ahead: Should I Pre-Pay?

Pre-Planning/Planning Ahead:


“Is this what they would have wanted?” is an all too common question when families come to plan a funeral. Making your wishes clear ahead of time can prove to be a great comfort to loved ones.



What is Pre-Planning?


Pre-planning is simply the process of drawing up plans for a funeral before they are needed. It involves gathering a variety of family information and making decisions about the types of service you want. Working together with a funeral director you can plan, organize and record all your requests.


Our staff can lead you through the process, providing advice and guidance along the way. They will ensure that you have all the information you need about our products and services, allowing you to make informed decisions.


You may choose to pay for the arrangements in advance, or your plans can simply be held on file at the funeral home to be carried out when they are needed and invoiced to the estate or family at that time. Our staff will explain your options when you meet with them.



Why Pre-Plan?


While everyone who makes the decision to preplan has their own reasons for doing so, we are often told the greatest motivator is the desire to protect their family by ensuring that they won’t face the difficult task of making arrangements at the time of loss.


We advocate pre-planning because our experience has shown us that not only is planning ahead virtually stress-free, but people have the time and information they need to make carefully considered, pressure-free decisions that are the right choice for themselves and family.



What About Pre-Payment?


For many people pre-planning has become an extension of the estate planning process. It is simply one more thing they choose to take care of as they plan for retirement and the next stage in their lives.



Should I Pre-Pay?


Each person’s individual circumstances along with other factors will influence this decision, but there are a number of advantages to pre-payment that you should consider:


Estate Planning: People often chose to pre-plan and pre-pay in the years leading up to their retirement. Typically it is at this point in our lives that we are in our prime earning years and have the most expendable income. For many, this is the easiest time to potentially remove an unpredictable future expense from their financial planning.


Budgeting: Our pre-planning program offers a payment plan option that allows you to pay the cost of selected services and merchandise over a period of time.



Pre-Payment Options:


Those who choose to pay for funeral arrangements in advance generally have a choice with regard to how and when they pay. As mentioned you can simply pre-plan your funeral and the folder with your arrangements will be held on file at the funeral home to be carried out when they are needed and invoiced to the estate or family at that time or if you desire you can pre-pay your funeral by establishing a funeral trust fund account. We participate in the New Jersey Prepaid Funeral Trust Fund (CHOICES).


How It Works


If the New Jersey Prepaid Funeral Trust Fund (CHOICES) did not exist, most funeral directors would have to deposit pre-payments into individual trust accounts and handle each account separately. By contrast, CHOICES provides a safe, well-managed trust earning competitive interest rates. Your funds are pooled with thousands of other accounts in jumbo certificates of deposit and the interest earned over time can help offset the cost of inflation. Pre-paying your funeral in full and not making any withdrawals should assist your funeral director in providing the services and merchandise you selected when it is needed.


To learn more about New Jersey Prepaid Funeral Trust Fund (CHOICES), click this link here.


Prepaid Agreements


When you prepay for a funeral in New Jersey, it is called a prepaid agreement. There are two kinds of prepaid agreements: revocable and irrevocable. The agreement type used is based solely on whether or not you are currently receiving (or expect to receive) Supplemental Security Income (SSI)/Medicaid or other mean-based public assistance. Revocable and irrevocable agreements can both be funded using any of the permissible funding methods.


Revocable Agreement


Revocable agreements are fully refundable, transferable and adjustable. This means once arrangements are made, you may request a refund and/or change the funeral home and the selected funeral services or merchandise at any time without penalty.


Irrevocable Agreement


New Jersey law specifically limits irrevocable accounts to anyone who is receiving or seeking eligibility for SSI/Medicaid or another means-based public assistance program. Only individuals who currently receive assistance, or expect to apply for such benefits within six months, may establish irrevocable arrangements in order to spend down assets.


Irrevocable means that the funds used to prepay funeral arrangements are NOT REFUNDABLE and must be used for funeral and burial purposes. By law, irrevocable agreements cannot be canceled or refunded; however, they are still transferable—meaning you may change the funeral home you’ve selected at any time.


Excess Funds


The funds in your prepaid funeral account will be used to pay the funeral home for its services at the time of death. The distribution of any remaining funds after the funeral bill is paid is determined by the agreement type, account purchaser, and funding method.


Excess funds from a revocable prepaid funeral account are payable to the estate of the deceased (if the deceased was the account purchaser); the account purchaser (if different from the deceased and still living); or the beneficiary (if the funding method was an insurance policy).


Because funds from irrevocable accounts can only be used to pay for funeral expenses, excess funds must be returned to the State of New Jersey. This provision was put in place to help reimburse New Jersey for a small portion of money it spends each year on the SSI/Medicaid and General Assistance programs.

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