WHAT OPTIONS DO I HAVE?
There are two primary ways people pre-fund funerals. Until recently, the most common way was to meet with a funeral director, choose the goods and services that you want, and make a monetary deposit into an interest bearing-trust account. This method is known as bank trusting. Consumers may put as much money into the trust as they wish, unless they are under certain medical assistance restrictions. All payments made under this type of agreement, along with any interest or dividends, must remain in trust until death or until the consumer makes a written demand for the release of the funds. Under current law, the first $4,000.00 of the trust may be made irrevocable for medical assistance exception.
The second method of pre-planning involves insurance. Under this type of arrangement, you may also choose funeral goods and services like a bank trust, although these plans are funded by the proceeds of a life insurance policy. The advantage to using life insurance is the ability to pre-fund all aspects of a funeral, including the full price of merchandise, funeral home services and cash-advance items. When an irrevocable attachment is put on an insurance policy, the full balance of the funeral goods and services selected, including cash advance items, may be funded. These pre-funded plans are subject to certain restrictions, and only the amount of the pre-arranged funeral plan may be placed in trust (in other words, you cannot intentionally overfund a burial policy to shelter additional money from creditors).
As of recent, approximately 95% of the pre-funded funeral plans we create are funded through life-insurance. For more information about the differences, or to talk with one of our staff about the many benefits of pre-planning, please do not hesitate to call on us anytime.
Some frequently asked questions:
Can we take out a life-insurance policy for funeral expenses if we already have other insurance policies in force?
Yes you can. This is normally not a problem, unless you are trying to spend down assets for Medicaid eligibility. If this is the case, we may be able to assign all or part of your existing policy to the funeral home. Please consult with us if this is the case.
What age is the insurance policy valid through?
Burial insurance policies are valid until age 100. If you surpass that age, you may choose to keep the policy in force at a reduced dividend rate, or cancel the policy and receive the cash value.
What happens if there is excess money in trust or insurance after the funeral expenses are paid?
If a balance remains after all funeral expenses have been paid, the excess funds will be returned to the estate, or to a previously named beneficiary. These excess monies may be subject to estate or other taxes, and by Wisconsin law is made available to creditors if outstanding debts remain.