Pre-paid or "pre-need" funerals

A major theme of Planning Ahead is that the decisions we put off tend to be made for us - by circumstances or, in the case of a funeral, family.

You may not be around to attend your own funeral, but there are a few reasons why pre-planning might be a good idea:

Cost - When you arrange a pre-paid funeral with a funeral director, you will pay at current prices for a funeral that will occur some time in the future. That is, you will be protected from any price increases in the meantime. The same applies for cemetery plots, which are a major component of the cost of a funeral with burial. (Some additional costs, for example any new or increased government taxes, may be applied at the time of the funeral. These will be detailed in any pre-paid funeral contract.)

Control - You can not only nominate burial or cremation, but specify the details of the service or what you want to be wearing in your coffin. These can be specified in your will, too, but the contents of a will are often not known until after the funeral. And, if you want to plan in some detail, a funeral director and/or cemetery is in the best position to advise what is doable and affordable.

Calm - Without pre-planning, families have only a few days to find a funeral director and make all arrangements. A pre-paid or pre-arranged funeral can be a blessing to families at this time, especially if you have discussed your wishes with them during the pre-planning.

Pre-plan or pre-pay?

If you're more interested in the pre-planning than financial benefits, it's not necessary to pay upfront. Most funeral directors will be happy to go through the planning process with you, without obligation.

Regulation of pre-paid funeral funds

Funeral directors who are members of the Australian Funeral Directors Association are bound by a code of conduct regarding pre-paid funeral monies, requiring funds to be held by third parties. This protects customers in situations where a funeral director sells the business or closes.

Whether a pre-paid plan is refundable or transferable, for example in a situation where you die interstate, depends on the terms and conditions of the individual contract. When someone with a pre-paid funeral dies far from the funeral firm with whom they have a contract, many funeral directors will sub-contract the funeral to a local funeral director. Alternatively, and if practicable, the body can be transported back to the original funeral home.

Pre-paid funeral cover can be purchased through a local funeral director, banks and insurance providers. To plan the details of a funeral, talk to a funeral director.

Pre-purchasing grave and memorial sites

Graves and memorial sites are normally purchased from the cemetery or crematorium. To be accurate, it is not the grave itself that is purchased, but a right to interment. In some states, that right is perpetual, and in others it may be for a set period of time, often 25 years, after which the family has the option to extend the right or relinquish the grave. This is known as renewable tenure.

In general, it is possible to pre-purchase a grave or memorial site in the same way as for funeral services. However, cemetery land is a limited resource, so there are some restrictions on pre-purchase. In some of the fuller cemeteries, where graves are scarce, it is not possible to pre-purchase a grave site except to reserve the site adjacent to a burial occurring now. In some states, if a right of interment is pre-purchased but then not exercised within a certain period, it may lapse so that the right may be acquired by someone else.

As always, it pays to do some research and contact likely cemeteries to find out what is available.

More information

• Australian Funeral Directors Association - Pre-paid funerals FAQ and Pre-paid funerals policy (PDF).
• Centrelink - Prepaid funeral expenses factsheet
• FIDO - Claiming life insurance money - ASIC maintains a database of unclaimed accounts, including superannuation, banking, and insurance.