Wednesday, July 13, 2016

Making Decisions about Funeral Arrangements

Well so much for scheduling posts to go up every Tuesday, I guess my technical expertise are not as sharp as I thought.

Estate planning focuses on the legal and financial aspects of the distribution of the person's assets following their death. While our clients appreciate the peace of mind they get from this planning there are other issues related to death and dying which are equally important to consider, many of which are more personal and may have a greater impact on your loved ones. Today's blog addresses one of these very personal matters, issues surrounding making funeral arrangements.

Following the death of a loved one, an issue that often causes the most complications is the funeral arrangements. Many questions surround this matter, including what would the deceased want, who is responsible for paying for services, and who has the authority to make decisions? Each of these areas can be fraught with intra-family stress and strife, but as with many other issues addressed in this blog, planning can limit or eliminate many of those problems.

For many individuals, funeral planning begins long before they have any reason to believe death is imminent. This planning takes multiple forms, from a simple note stating their wishes to a detailed letter of instruction including their desire for burial or cremation, the selection of a church for services and hymns to be played, and even charitable organizations to which contributions can be made to honor the decedent in lieu of sending flowers. It is also becoming more common for individuals who want to preplan their funerals to work with a Funeral Director to plan and completely pay for their services in advance. The benefits of preplanning the funeral, as articulated by our clients, include ensuring that their wishes are honored, avoiding excessive spending on funeral services, and knowing that with the planning completed their family members will have more time to focus on the grieving process. While many benefits to preplanning your funeral exist, not everyone is comfortable doing so. Nonetheless, it is important to know who will be responsible for these decisions when the time comes to make them.

Recently the Michigan Legislature updated the law that governs who has authority to make funeral decisions to allow individuals to name a designated Funeral Representative. This individual, who may be named as part of a Will, Power of Attorney, or a separate writing signed in the presence either two witnesses or a notary, has legal priority to make decisions regarding final arrangements. Prior to this change, and in the absence of a designated Funeral Representative, surviving spouses have priority, followed by children, grandchildren, parents, grandparents, and finally siblings. This extended statutory plan of priority creates many conflicts, as various family members argue about funeral arrangements, each believing they know best for their loved ones. With the change in the law, an individual can appoint the person responsible for making decisions and inform that person of their wishes in advance. Regardless of who makes decisions, a frequent concern regarding funeral arrangements is the cost of those services and the responsibility for paying that cost.

The average cost of a traditional funeral in the United States is between $7,000 and $10,000, which is a substantial expense for anyone to bear unexpectedly. Some individuals choose to limit the effect of this cost on their loved ones through preplanning and prepaying for their funeral as we discussed above, others carry small life insurance policies to cover the expense, but many people do nothing at all. In these circumstances, loved ones must figure out how to pay for these costs in a short time. Under Michigan probate law, the costs of funeral and burial take priority over all other claims, except the costs and expenses of administering a decedent's estate. This means that whoever pays for these expenses is entitled to reimbursement for their costs before almost all other creditors. This priority however does little to clarify who will be responsible for these expenses. One potential solution to this uncertainty is executing a living trust. As we have discussed before, following the death of the trust Grantor, the successor Trustee can immediately take over the administration of the trust and in that capacity make distributions from the trust to pay for funeral expenses. In the absence of this planning however a relative or other individual must incur the substantial costs and await repayment during the probate process.

While problems and choices follow us even in death, it is possible to limit the problems that arise following your death by engaging in planning while you are alive. While this planning may initially be difficult to consider, the benefits to your loved ones in a very difficult time make that difficulty seem minute.

Alan and Matt

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