Personal Finance

Here's what you should really do before you die: Plan your own funeral

Key Points
  • The funeral industry is not transparent when it comes to prices, particularly online, a new study finds.
  • Avoid spending more than you should by carefully planning in advance and letting your loved ones in on the conversation.
Mike Dabell | Getty Images

You've heard about writing your own obituary, but what about planning your own funeral?

Because of limited price transparency in the funeral industry, that may be the best way to save money, according to experts.

A lack of clarity in prices on funeral homes' websites has long been criticized by consumer groups, yet the practice persists, according to a new study.

The federal Funeral Rule enables consumers to choose just the goods and services they want. Under the rule, funeral homes are also required to present a printed, itemized list of prices. The home must also specify that basic and less expensive cremation and burial services are available.

Although the rule was established in 1984, there's no requirement to post funeral prices online, according to a joint study from the Funeral Consumers Alliance and the Consumer Federation of America released this week.

According to the report, just 30 of 193 funeral homes in small- and mid-size state capitals include price information on their websites. In California, where state regulations require funeral homes to post prices online, 18 of 25 Sacramento funeral homes with websites included costs.

Stronger enforcement by the Federal Trade Commission would force more funeral homes to post their prices online and make it easier for consumers to shop, according to the study.

We're all going to leave this world. If we don't talk about it, it doesn't mean we're not going to die.
Rita Cheng
CEO,  Blue Ocean Global Wealth

"There is a documented history of the funeral industry keeping prices hidden or hard to find," said Joshua Slocum, executive director at the Funeral Consumers Alliance.

Pricing opacity often leads to bigger funeral bills for consumers. A simple cremation in Washington, D.C., for example, can range from $1,295 to $7,595, depending on the funeral home, according to Slocum. But most consumers fail to ask for the price, let alone compare what different businesses are charging.

That is because emotions and spiritual and religious beliefs often work against a family's interest, according to Slocum.

"We have to be able to say, 'The amount of money we spend on the funeral is not the way we measure our love for the person who died,'" Slocum said.

"We try to be transparent so everyone knows the final cost before they make a decision," said Randy Anderson, secretary of the National Funeral Directors Association, who owns two funeral homes in Alabama.

As more funeral homes, including Anderson's, consider listing prices online, the main concern is whether consumers will understand those costs, he said.

"I encourage families to preplan and come in at a time when there's not any emotion when they can make logical and good decisions," Anderson said.

Here's how to plan a funeral without breaking the bank.

Plan ahead

When someone asks for advice on how to get a cremation or burial at a reasonable price, Slocum said he tells them to check out five or six funeral homes.

That requires that you think in advance. Once a death happens, it is difficult to make the time or have the wherewithal to comparison shop.

Set funds aside

It is also a good idea to set aside funds or prepay for some of the arrangements, suggested Rita Cheng, co-founder and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.

"Don't leave your loved ones mourning your loss and then figuring out how to pay for things," Cheng said. "That's stressful."

We have to be able to say, 'The amount of money we spend on the funeral is not the way we measure our love for the person who died.'
Joshua Slocum
Executive director at the Funeral Consumers Alliance

Consider a life insurance policy that will help cover the services, or put aside funds designated for that purpose in a bank or brokerage account.

You may also want to set up a payable-on-death agreement on your bank accounts, Cheng suggested. Those agreements allow for the funds in those accounts to transfer to beneficiaries and bypass probate, whereby the validity of a will is established.

A payable-on-death agreement is valid for bank accounts such as checking, savings or money markets. It does not apply to investment accounts, which would require a transfer on death arrangement.

Be warned, however, that you can be susceptible to scams when prepaying for arrangements. Verify that you are working with a credible business when paying for services, plots or tombstones, and discuss what will happen if they are no longer able to fulfill the contract.

Make your wishes clear

Use a funeral planning kit to document your wishes, Slocum suggested. Share paper copies with your loved ones. Avoid storing those documents where they cannot be accessed, such as behind a password-protected PDF.

"Once you get those thoughts and wishes down, hopefully that's part of a conversation," Slocum said.

That document should be stored with an up-to-date will and advanced medical directives, which stipulate your health care wishes if something happens to you.

Where there's a will ... why having those documents is essential
Why we all need a will

You also want to give your loved ones flexibility with those plans, to reduce the temptation to overspend. Slocum recalled how one mother requested that her daughter bury her next to her deceased husband in Oregon. But that simple request got complicated when the mother died in Tennessee.

Anticipate those unexpected developments by telling loved ones, "I give you permission to do what you need to do," Slocum said.

Make it a team effort

If you are in the position where you are planning an imminent funeral, do not do it alone. Lean on a family member, friend or spouse to help you, Cheng suggested. Having that support can help you think through the choices and stick to a spending limit.

The bottom line with all funeral planning is to open the conversation.

"I've always positioned it with clients like this: We're all going to leave this world. If we don't talk about it, it doesn't mean we're not going to die," Cheng said.

(Correction: The price ranges for cremations cited in the story have been corrected.)

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