Funeral pre-planning is arranging a funeral prior to the death of the person for whom it is intended.

There are two aspects to funeral pre-planning. The simplest form of pre-planning is to plan a funeral in advance but not to pay for it. The second aspect is to plan and pay for the funeral in advance.
Reasons for pre-planning a funeral include the following: 

• Relieving the survivors of the stress and burden of making funeral arrangements at the time of need.
• Making sure the funeral is exactly what the person for whom the arrangements are made wants.
• Guarding assets from inflation by using today’s dollars to pay for funeral arrangements.
• Protecting an individual’s resources when determining eligibility for Medicaid by establishing a “Burial Fund.” Please be advised a pre-need agreement under Medicaid is irrevocable in New York State and several other states.
Important aspects of prepaying:

• Make sure you always have a pre-need agreement for services whenever you pre-pay a funeral.
• Let someone you trust know that you have prepaid your funeral arrangements and the name of the funeral home. Otherwise, arrangements may be made not in line with your wishes.
• Always deal with a funeral home with which you are familiar and comfortable or that has been recommended by someone you trust.
• Know how and where your money is being deposited.
• If you pay by cash, get a receipt and keep it in a safe place.
Make sure you get:

A General Price List from the funeral director.
A Pre-Need Itemization Statement that lists the items of merchandise, services and facilities you have chosen, and the price of each. You can leave details open until you have made a final decision, or until you have chosen someone to make these decisions for you.
A Pre-Need Agreement that outlines all the terms, as well as your rights as the purchaser. It must also state how the principal and interest will be applied to the cost of the funeral services and merchandise at the time they are provided.
(Please note the preceding is based on NYS regulations. Other states may be different.)
Funeral homes in New York State may offer a “guaranteed” funeral or a “non-guaranteed” funeral. Most funeral homes offer a non-guaranteed funeral, where the funeral home provides the items and services selected at the rates being charged at the time of the funeral. The principal and interest of your account will be applied to the funeral home’s total charges. If this amount does not cover the expenses, the estate will be charged the difference. If the amount in the pre-need account is greater than the funeral costs, and the account is set up revocable, the excess money will be refunded. In irrevocable trusts under Medicaid, excess funds are turned over to the county of jurisdiction. For those funeral homes that offer a guaranteed funeral, the funeral home guarantees to provide the services, merchandise and facilities selected for the amount of money in your pre-need account. The guaranteed funeral is not affected by future price increases, since the funeral home accepts the principal and interest as payment in full. A guaranteed funeral will not include certain items such as cemetery costs, clergy fees, death certificate fees, etc.


• The contract purchaser is responsible for paying income taxes on interest earned in the account. An IRS form 1099-NT is sent to the purchaser in January of each year.
• Except with irrevocable trusts, the purchaser can withdraw the principal and interest from the account at any time. The funeral director cannot charge any processing or administrative fees or penalties for early withdrawal.
• If a funeral home is sold to another funeral home, both funeral homes must notify you in writing within 30 days of the sale. You have the option of changing the arrangements, requesting your money back with interest, or giving written authorization to transfer your money to another funeral home.
• If a funeral home goes out of business, NYS law requires the funeral home to return your money with interest or allows you, with written authorization, to transfer the funds to another funeral home.
• The above is, in part, extracted from a publication of the NYS Bureau of Funeral Directing, Before Prepaying Your Funeral, Know Your Rights. For a copy please contact the Overton Funeral Home or the Bureau of Funeral Directing, NYS Department of Health.
Share by: