In this episode, John Ross and Lisa Shoalmire discuss issues that surround dealing with, planning for, and purchasing your funeral.

Episode Transcript
John
Welcome to another edition of Aging Insight. I'm your host, John Ross, here with my co-host and business partner, elder law attorney, Lisa Shoalmire. And the two of us, we devote our entire practice to helping seniors and people with disabilities navigate through the maze of laws and regulations and tax issues that exist around getting older and trying to care for yourself and trying to do it the best way possible. We know that you want to remain independent, you want to live on your own terms. You don't want to be a burden on other people, but we also know you don't want to go broke trying to accomplish all of this.
John
But what we know is that you can do it. That accomplishing those goals is well within your reach, but only with the knowledge of how to get there. You've got to have a map. If you don't have a map, you're not going to know how to get from point A to point B. And so we're your map, we're here to help give you that guidance. That's what the program is all about. And we talk about lots of different things on here. Lisa, we talked about, the one about leaving a legacy and that's pretty warm and fuzzy.
Lisa
Oh yeah, it is. What you want your beneficiaries and your family to remember about you. And what assets and things that whether they're worth a lot or just sentimental, that you're gonna pass. That's warm and fuzzy.
John
That's right. Occasionally, we do have some warm and fuzzy topics. But so often, we're talking about so many other things that are impacting our clients like disabilities, death and other things. Things that having children who have their own problems and stuff like that. And so sometimes, we gotta talk about the bad stuff, but by talking about the bad stuff, a lot of times, you can learn.
Lisa
That's right, you can learn and you can avoid compounding a difficult situation and making it even worse on your family or yourself by getting some information and talking about it. And so today, we decided we would confront one of those topics. And so today, we're gonna talk about some of the issues that surround dealing with, planning for, purchasing your funeral. That's not necessarily warm and fuzzy, although John, I can tell you, I've been to few funerals that I felt better at the end than I did when I walked in. So they can be a real celebration and a real time to continue to start passing on that legacy. But there's a lot of things that go into dealing with and planning for and paying for that funeral that those mourners don't really ever see.
John
That's right. And I think the first place to start in all of this is the cost. When I first got into this kind of practice, I was still pretty young, my parents were still pretty young. I didn't really have to deal with... I had been to funerals, but I was never in a position where I was having to pay for one or to see what they cost or anything like that. And as I started dealing with clients and started helping guide them trough some of this, I started seeing the bills, I started seeing what they were paying for funerals. And Lisa, in my experience, on the cheap end, a couple of thousand dollars.
Lisa
Right. These days, we are getting more options even in our local viewing area. A cremation-type funeral is running $1,500 to a couple thousand dollars. And then you can, a lot of more traditional, just a burial or graveside-type ceremony is probably the next step from that. And then we get to what many of us think as a more traditional funeral service where we may have some visiting time at a funeral home. And then the following day, we have a service, maybe it's at the chapel at the funeral home or maybe it's at the church of the deceased. And then we move on to graveside service and ultimate interment. And on that end of the spectrum, those more traditional type funerals.
John
Yeah, $10,000, $15,000 for one person. That may sound high, but it's just not all that uncommon. So there is a significant cost to all of this from a financial standpoint. And so I'll have people all the time and they'll say, "Well, John, should I pre-pay for it? Should I just sock some money away or should I just not worry about it and let somebody else pay for it altogether? Should I get insurance to pay for it or should I just use cash?" There's lots of those sort of questions out there related to the cost of it. And of course, I guess the first part is you could, when it comes to paying for it, you can pre-pay for a funeral.
Lisa
Yes.
John
That is an option. You can go over to the funeral home, you can pick out exactly what you want, and go ahead and pay that money. And if you talk to the funeral home providers, they really tout this benefit because their position is, "Well, look, if you're paying at today's prices, then you don't have to worry about those prices going up in the future." Which if you know exactly where you're gonna be buried and you're using a company that is gonna be around, that got a long history, that they're a well-established company, that can be a good thing. On the other hand, if you pre-pay for a funeral in Texarkana and then you decided that someday, "You know what? I'm gonna go move to Seattle to be close to my grandkids." Well, now, you've got a prepaid funeral plan back in Texarkana that doesn't do you a whole lot of good in Seattle. Those plans are transferable, but...
Lisa
But there's usually some costs involved in that transfer. And so sometimes, there's still some out of pocket to the tune of with that few thousand dollars, even though you've pre-paid, if we're needing to cover, go from one geographic location to another.
John
Right. Also, those guarantees about, "Well, it's gonna cost today's prices." That's today's prices at that funeral home, not if that policy gets transferred to another facility, then you're only gonna take the value. And then you're gonna get whatever the value is at that facility on the date of the transfer, which could be 10 or 15 years later. You can pre-pay, you just got to be careful about it. But the cost, that's just one little piece to this puzzle. There's a lot of other pieces and maybe some you didn't even think about as it relates to your long-term care planning. So stick around, we're gonna take a break and when we come back, we're gonna keep talking about funerals and some of the things you should know and be wary of. So stick around.
Lisa
Welcome back to Aging Insight. I'm Lisa Shoalmire and I'm here with John Ross. And today, we're talking about a topic that some find a little unpleasant, but yet, you know, John, when I'm talking to clients and they're thinking about their families and their legacies, the reality is, many folks are just very practical about this. And they realize that, "We're not gonna live forever." And there are certain steps one has to take in order to plan for that actual... The death of that body. A lot of folks, if they're in the planning mode, they go ahead and deal with planning for their funeral.
John
Right. And you might be the kind of person that has a lot of concerns about your funeral and the way it should be taken care of. And I can speak from personal experience. My grandmother was meticulous about her funeral arrangements and what she wanted. She had already picked out caskets. She had the church, the grave site, the headstone, the music, the flowers, everything, even down to giving me specific instructions that she wanted to be buried in dry dirt, and only dry dirt, no mud. So some people have very particular things and that's important to them. And if it's important to you, we want to make sure those things happen, other people could care less.
Lisa
Right. They figure, well they've left the world, so the vessel they were living in while they were here, it just doesn't matter.
John
That's right. But on our radio show, we talked about this topic recently. And I had a caller call in who said, "You know, John? Funerals are not about the dead, they're about the living, they're about the people that you leave behind. And so while you may not care, there may be other people that do care and some of those people may even have different cares."
Lisa
That's right.
John
And so opening up this conversation to talk to the people, if you have things that you want, let's get those out in the open. If you don't care, let's find out if anybody else has some concerns, some things that they want so that we can make sure that these things happen, and these may be very personal to you or they could be very particular religious type things. Lots of religious institutions have very strict instructions about burials and the religious rites associated with them. If you want to make those things happen, again, the start is having that conversation. But Lisa, during the same radio show, somebody called in and they said, "Well, John, is there somebody that I could make like my funeral boss?"
Lisa
That's right. Yes.
John
The person who's in charge of it all?
Lisa
Yes, and in fact there is. Now, of course, you're always free to make your own pre-arrangements to where you may grab a notebook and write down exactly what you want. But at the time your funeral comes along, you're not going to be here to execute those plans, so there is a way that we can actually legally name a person to be solely in charge of the disposition of your body after the time of your death. And this is a legal document that is signed in a very formal manner, somewhat like a power of attorney or perhaps a will, but this designation of agent, that's what you're doing, is you're designating someone, designating an agent to dispose of your remains. This is a document that frankly, if you have couple kids; two, three, four kids, and you know that one of those kids are going to carry out your wishes to a T, then maybe consider instead of just telling them, make it legal and consider naming that child that you know will carry things out as your agent for burial purposes.
John
Right. And this is whether, especially, if you've got some very specific things that you want, then you've got to have somebody who's gonna make sure that those things happen. And Lisa and I in our practice, we have certainly had situations that the person wanted one thing and somebody else was about to go completely against them. They had died and they had said they never wanted to be cremated, but the family just decided, "You know what? It's cheaper. We're going to cremate him." If you don't want those sort of things, if you have concerns, giving that designation of burial agent in place and not only can you name the person, but then you can also give them instructions, "Here's exactly what I want you to do and here's how I want you to do it." Or you can just name that person and say "Look, I know you'll do it right, so whatever you think is right, that's the way to do it." But that person has an enforceable right. They can, if necessary, they could take that document to a court and get the court to enforce it so that they have the power to do what's necessary. Now, of course Lisa, hopefully none of that...
Lisa
Right. We hope we never see the inside of a courthouse at the time of death, but John, sadly, you and I have...
John
We have both been there.
Lisa
We have been in the courthouse with...
John
Literally, moments.
Lisa
Yes.
John
Almost after somebody... And that's a terrible situation and you don't want to find that. Again, the idea is you want to create legally enforceable documents, legally enforceable rights and duties and then not need them.
Lisa
Right. It's always best to have them and not need them.
John
That's exactly right, but you...
Lisa
Than need them and not have them.
John
But you don't want to need them and not have them. So, that designation of burial agent can be a very powerful tool. And I will say, a lot of times Lisa, people, I have seen where they have included this in their will.
Lisa
Right. And that's really not the best place for something like that because in the state of Texas, you can probate a will up to four years after someone's death. In the state of Arkansas, it's five years. The will may not be something that is located, that anyone knows about at the time of death and the time that funeral arrangements need to be made. So, that designation of a burial agent is best in a separate document and in a location that will be easy to get to at the time it's needed.
John
Right. It's okay to include something about your burial in your will, but again, keep in mind, the will is not valid unless it has been probated, and it just takes time to probate a will. You don't want to be sitting somewhere waiting to be buried while somebody else is trying to deal with probating that will. Keep those things separate, keep your designation of burial agent as a separate document. In that way, they've got something that's legally enforceable and it's separate and apart from all of the formalities that go along with disposing of the rest of your stuff. There's still a few other issues related to funerals, and some good things, some bad things. We're gonna talk about a few more of these right after this break, so stick around, we'll be right back.
Lisa
Welcome back to Aging Insight, I'm Lisa Shoalmire here with John Ross. And today, we're talking about funerals and some of the issues that surround making sure your funeral wishes are carried out and disposing off the remains of the deceased. We've talked about designating an agent to make sure those plans are carried out. We've talked a little bit about the cost or the range of cost for that funeral and purchasing a pre-arranged funeral. But John, there's also an aspect to funerals in the financial side of it that comes into play even while we're still here and we're still kicking.
John
Right. Yeah, and this is where you get into your long-term care issues. And people that watch us regularly may think, "Gosh John, Lisa, y'all are just beat up on these long-term care problems." And the reason we do is because nobody else is thinking about it. People have such a tendency to just think that they're gonna live happy, happy, happy, and then die. And so all of their focus is on that death, we've got to back it up.
Lisa
Right, we need to focus on the living.
John
Yeah, we've got to focus on the living. Don't think about estate planing, think about life planning, back it up. When it comes to these funeral issues, here's a situation that we'll see. Well, mom, she's got a house, she's got a car, she has a little bit of money in her bank account, but not much. And she's got this $10,000 CD sitting over in the bank and she calls that her funeral plan. That's her $10,000, she's set it over there, set it aside and that's what she's gonna use for her burial. And then something happens and mom needs some form of long-term care, maybe she needs nursing home care. And because she doesn't have enough monthly income to pay for it, she needs Medicaid. And under the Medicaid rules, she can qualify for Medicaid with a house, so her house doesn't count, her car, the car doesn't count, but everything else she has has to be less than $2,000. And so maybe her little checking account's only got $800 and they say, "Well yeah, here's the $800, we're down below $2,000. Well, what about this CD over here? That's got $10,000." "Well, yeah, but that's for her funeral, we don't wanna use that because that's for her funeral." Lisa, does Medicaid just say, "Oh well, you can just keep that $10,000 there."
Lisa
Oh, they certainly do not. It doesn't really matter what you call the asset, all it matters is what that asset adds up to in value. A situation like that where we have mom who has thoughtfully planned to cover the expense of her funeral, here's a situation where we need to convert those dollars that are just sitting in the bank that are counted, we're being told they have to be spent before we can get any assistance with that long-term care need, now is the time to take that money and go purchase an actual funeral contract. We convert dollars into an enforceable funeral contract. And what we do is we hand the funeral home the money, and then they hand us back a contract which is a promise that they will perform funeral services at the time it's needed.
John
Yup. And the reason we do this is because under the Medicaid rules, a pre-paid, irrevocable funeral contract is not a countable asset. So $10,000 in the bank, that $10,000 CD, that was gonna keep mom from being eligible for Medicaid. But that $10,000 spent at the nursing home on a pre-paid, irrevocable burial contract, and irrevocable means you can't get the money back, then that does not count against her. And so we've managed to save that $10,000 to accomplish that goal of paying for the funeral. That can be done. And it can even be done last minute.
Lisa
Sure.
John
Doing something like that, but again, it's got to meet these terms, it's gotta be pre-paid, it's gotta be an irrevocable contract in order for it to qualify for Medicaid.
Lisa
Well, and I'll just tie this into something else we've talked about John. And that is, a lot of times, if we have that loved one who's now had this medical crisis and we need to take that cash and perhaps purchase that pre-paid funeral plan, if the senior themselves is not capable of doing that, then we need to make sure we have an agent under a Power of Attorney that does have the right and the authority and the legal power to go to the bank, pull that $10,000 from that CD and actually go make that contract with the funeral homes. We talk about planning, John, and this is just another one of those circumstances. Make sure you have a durable Power of Attorney in place. Here's just one example of how that power can be used.
John
Right. Again, the using of pre-paid funeral arrangements can actually be a good way to salvage some of that money. But if what you have is, let's say you've got a $10,000 insurance policy, chances are, that insurance policy has a cash value. And if it has a cash value, that cash value is gonna get counted and keep you from qualifying for Medicaid. I can't tell you how many times I've seen people who took their money, they put it in an insurance policy for their funeral, but then before they died, that money got wiped out. So, be very careful about this and kind of think about these things. And of course, if you ever have other questions, you can always call us. We have our live radio show every Saturday on 107.1. And you can call in and ask your questions right there live on the radio. Of course, you can always find us on the internet at aginginsight.com and all over the place out there. So look for us. And if you see us out there and you got a question, just stop us. We're here to help.
Lisa
That's right. And you can catch us every week right here on KLFI. And we're here to bring our topics to you, and to come into your living room, and to give you answers to those questions. We appreciate your support. We will see you next week.
John
Bye-bye.

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