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Preplanning a funeral is truly a gift to your family. But if you prepay, its a gift to the funeral home. Ramsey believes that, if a person has the financial means to prepay funeral expenses, it is a better idea to put the money into an investment account and see it grow.
There are a number of possible disadvantages of purchasing a pre-paid funeral or cremation plan, including: Business Stability of the Funeral Home. Pre-paid funeral or cremation plans are only as dependable as the funeral home offering them. Not Portable. Inflexible Contract. State Laws Differ.
A prepaid funeral contract is a legal agreement that says you will pay now for funeral services that will be needed in the future. You can pay with money, insurance, or an investment that you own.
Its for people who want to spare their loved ones from having to make decisions and experience financial stress while grieving. But some experts say these types of plans may end up costing you more than you would pay for an average funeral after fees and other charges have been calculated.
If a prepaid funeral plan is maintained through a revocable trust, you have the option to cancel the agreement and get a substantial lump sum refund. The trust will keep hold of an amount for the cancellation fee to cover administration costs). An irrevocable trust, on the other hand, cannot be reversed.