Preparing for Final Expenses

An important aspect of estate planning is preparing for final expenses. As of 2023, the median cost of a funeral with burial services was $8,300 and the median cost of a funeral with cremation services was $6,280 (according to a survey by the National Funeral Directors Association). Instead of leaving your loved ones to figure it out after you are gone, it may be helpful to lay out your wishes and pre-plan for some of the expenses while you are still alive and save your family the heartache of trying to determine your wishes and find the funds to pay for them while they are grieving.

Note that the costs above may not include all of your final expenses. While the costs of funeral and burial services typically include fees associated with transporting and preparing the body, a hearse, and a casket, they don’t cover the cost of a cemetery plot or headstone, a reception following the burial or cremation, any memorial service fees that may be incurred, and the costs incurred by individual family members including travel to and from the service and clothing to wear during mourning.

Further, while the median costs of funerals in 2023 was between $6,280 and $8,300, this also doesn’t take into account any upgrades that may be desired. While a simple casket may cost only $1,000, one with comfort features may run closer to $4,000, driving up the overall cost of final expenses. In all, it may be wise to set aside at least $10,000 to cover your final expenses and prevent your family from scrambling to do so themselves.

There are several ways to prepare for final expenses while you are still alive.

• Consider buying a $10,000 to $25,000 life insurance policy to be used exclusively for your final expenses. You have a few choices here – you could consider purchasing a small, permanent policy and specifying that the proceeds of the policy be applied to your final expenses or you could purchase a specific final expense life insurance policy. Both will provide coverage through death, provided that the policy premiums are paid, and can provide funding for your final expenses. If you have a history of illness that may prevent you from qualifying for a permanent policy, final expense policies are typically “guaranteed issue” meaning that the insurer will not decline you for coverage on the basis of your health.

  If you are insured under a larger life insurance policy, you could also instruct your beneficiaries to use a portion of those funds for your final expenses. It’s important, though, that the policy be a permanent policy, otherwise there is the possibility that you could outlive the policy’s term and have no coverage at the actual time of your death. This may be a more desired route if you are concerned that having a dedicated life insurance policy for final expenses would limit the amount of funding you can provide for your final expenses and leave your family to cover any additional costs.

  Life insurance policy proceeds pass tax-free to beneficiaries outside of probate, so funds are available for immediate use and not tied up in the legal system.

• Prepay for your funeral. If you have specific requests and like to be in control, you can choose a funeral home and speak with its funeral director about pre-planning and pre-paying for your own funeral. By handling your own arrangements, you can ensure that your wishes about burial, cremation, memorial services, and location of interment will be followed, and you don’t have to worry about leaving any financial obligations for your loved ones when it’s your time. That said, this method works best if you work with a well-funded funeral home that is unlikely to go out of business before your death. Read the fine print of your contract before you hand over a check. What happens if you move to a new location before your death and your body needs to be shipped back to your desired location? Are there any protections in place should the company encounter financial hardships?
• Set aside money in a dedicated account to use for final expenses. Instead of purchasing a life insurance policy or actually planning and paying for your funeral, set aside money in a high-yield savings account. Savings accounts are payable-on-death accounts, meaning that as long as you have a beneficiary listed on the account, it will immediately become payable to the beneficiary with your death (and skip the probate process). Tell the beneficiary of the account that the funds are to be used for final expenses (and write out your instructions in your Last Will and Testament). This allows you to save as much money as you want without having to pay policy premiums or take on any of the risk involved with prepaying for your funeral.
• Learn what is available for veterans. If you are a veteran, eligible survivors may receive monetary burial benefits (between approximately $300 and $2,000) from the Veterans Benefits Administration. Memorial products such as headstones, markers, and niche covers can be applied for via the National Cemetery Administration. Military funeral honors are provided by the veteran’s service. Burial benefits (including a gravesite, grave liner, headstone, and flag) are available to eligible veterans at no cost. Funeral and cremation services are not covered or reimbursed.

Your surviving spouse or child may also be eligible to receive a one-time death benefit from the Social Security Administration. This amounts to $255 and can be paid to your surviving spouse (provided you and your spouse were living together at the time of death), or, in the absence of a spouse, to a child who is eligible for benefits. That said, this is a small amount of money and is unlikely to make much of a dent in your overall final expenses. Survivors would do well not to rely solely on Social Security payments to provide funding.

Most importantly – and regardless of how you decide to prepare for your final expenses – write down your wishes in your Last Will and Testament and talk to your loved ones about your desires while you still can. Don’t leave your family guessing about what you want when it comes to preparations. Make the important decisions ahead of time:

• Do you want a burial, cremation, or green burial?
• Do you want a viewing, and if so, what do you want to wear?
• Do you want flowers, donations, or no gifts?
• Do you want a full funeral service, a memorial service after the fact, a graveside service, or no service?
• Do you have a preferred funeral home?
• Where would you like your remains to be laid to rest?

Navy Mutual’s Estate Planning Personal Log can be used to document some of these decisions and provide your family with valuable information that might otherwise be lost with your death. In addition to providing information about your life insurance policies, we recommend that you fill out your desires for your funeral and how you would like your remains to be laid to rest, and provide contact information for pallbearers, if desired. You can also provide a full obituary, or details about what you would like included in your obituary, as well as where you would like it to be published.