Many people feel that they don’t want to be a burden on their families when they die, so they buy a pre-payment policy from an insurance company or funeral home. This can be very risky in many states whose laws offer little or no protection of prepaid funeral money.
Luckily, New Jersey has very consumer-friendly pre-need regulations. All monies paid in advance for funeral arrangements must be put into the New Jersey Prepaid Trust Fund. If you change your mind or move to another state, you can get almost all of the money back with interest. You can also change funeral homes easily because there is no contract with a particular funeral business. For more information, go to https://web.njsfda.org/public/Portals
The easiest way to set up for pre-payment is a Pay-on-Death account at a bank. You deposit money to cover the current cost of a funeral and interest accumulates to cover inflation. The account can be made payable to a trusted member of your family or a funeral agent of your choice. The money can only be used to cover your funeral expenses.
It is important to let your family know the details of your arrangements and to give them copies of any documents. Just telling them “Everything is taken care of.” is misleading because some things can’t be planned ahead of time. Your survivors will have to make some choices after you die.
A full discussion of your wishes will provide your family with greater peace of mind when they have to deal with your funeral arrangements.
If you plan to pay down assets to quality for Medicaid, your money must go into an irrevocable trust. Monies in a revocable trust can be taken by Medicaid if your other assets have been depleted.