Is pre-paying for your funeral a good idea?
By Moira Visoiu
On a recent episode of Keeping Up With The Kardashians, matriarch Kris Jenner decides to plan ahead for the entire family’s funeral. She takes them to Hollywood Forever cemetery and considers building a private family mausoleum.
She even goes as far as to climb into a luxury coffin to test it out. Kris said that pre-planning her funeral arrangements was a gift to her family, to relieve them of the burden of having to make those decisions at a time when they will be grieving her death.
The episode made me think about pre-arranging and pre-paying for one’s funeral – is it a good idea?
One article sets out the advantages and disadvantages of pre-paying for your funeral.
The advantages listed are:
If they are eligible funeral expenses, as defined in section 148.1 of the Canada Tax Act, than any growth is non-taxable;
It relieves the burden on your family of making these difficult planning decisions;
The ability to ensure you will have your own wishes carried out. Requests for certain funeral arrangements found in Wills are not enforceable at law – so if there is not enough money in your estate to carry out your wishes, they can be ignored. If you want to spend the rest of eternity in a private mausoleum like the Kardashians, this may be the only way to guarantee it actually happens;
If you have enough money to pre-pay for a funeral, then you can do it without any hassles. It’s not like buying life insurance to cover your funeral expenses, where medical testing or age restrictions may disqualify you;
The disadvantages listed are:
They are a bad investment. The interest generated is minimal and you will have little or no choice in how your money is invested. From a purely financial perspective, they are not the wisest choice;
You could fall victim to a scam. You have to take certain precautions to be sure that your money is protected. This includes making sure that if you move away or change your mind you can transfer your plan to another funeral service provider, or get a full refund.
The article concludes that investing your money in a Tax Free Savings Account is a better option than pre-paying for your funeral. That way you have control over how the money is invested and you can still prearrange your funeral so that your wishes are carried out how you’d like.
The article is written from a personal finance perspective, so although it is probably true that pre-paying for your funeral does not make good financial sense, if you are the type of person who wants to know that their wishes will be carried out exactly, then pre-arranging your funeral may not be enough. Read Toronto Estate Law Blog