Prepaid funerals have advantages, disadvantages

Marlena Hartz: Freedom Newspapers

While addressing the inevitability of death can be uncomfortable, planning ahead for a funeral can save money and lessen stress, according to financial advisors and funeral service providers.

Prepaid funerals earmark funds for funeral expenses, and, unlike cash, aren’t counted as an asset, a major benefit to seniors who want to apply for federal assistance programs, according to David Purrington of Wheeler Mortuary in Portales. It also, by contract, guarantees a set price for services regardless of a future increase in cost, Purrington said.

“It’s an expense you can pay for now. You can take advantage of today’s rates as opposed to future rates, that will apply when you do pass away,” said Contemporary Benefits Financial Planner Danny Martinez, of Clovis.
However, prepaid funeral arrangements can get messy, according to Clovis-born Jerry Lovett, now a Wausau, Wis., resident.

When Lovett’s aunt did business with Lawn Haven Cemetery of Clovis in 1966, she paid about $600 for her casket and assumed a burden had been lifted off her family. However, relatives ended up shelling out $1,500 in funeral costs after she died, according to Lovett.

Some extenuating circumstances contributed to the ordeal. The casket Lovett’s aunt purchased was too small for her, and an out-of-state funeral home held her funeral services.
Still, Lovett felt the family deserved better service.
“(Lawn Haven Cemetery) insisted on squeezing every penny they could out of us,” Lovett said.

Lawn Haven Cemetery Superintendent Rodney Muffley said the cemetery fulfilled its contract to provide a casket, but Lovett’s aunt needed an larger casket — which cost about $2,000 more than the one she purchased at the age of 25 in 1966.

The cemetery did forward the amount the aunt prepaid for her casket to Wright Colonial Funeral Home in Snyder, Texas, where her services were held, but it did not cover the cost of the larger casket, according to Wright Colonial Funeral Home manager Kent Wright.

Muffley said he inherited 75 more casket contracts from two previous cemetery owners when he and affiliates bought Lawn Haven in August. Those contracts will be honored, Muffley said, even though he will have to incur the cost of purchasing the caskets at today’s market rate since they were not in storage when he purchased the business.

Muffley said the cemetery would have absorbed the cost of purchasing Lovett’s casket had it been the same size as the one ordered. However, Lovett wonders how much his aunt’s $600 would have accrued in interest had she not contracted with the cemetery in the first place.

Since his aunt’s purchase, consumer protections have increased drastically, according to many in the funeral business.

Nowadays, most cemeteries offer only burial services.
Customers can purchase lots, vaults, and markers from cemeteries at the current market rate, avoiding inevitable inflation rates, said Rodney Muffley. However, most companies will not sell caskets to a cemetery, Muffley said.

“In the (19)60s, there were no regulations over pre-needs sales and you were able to buy a casket from a cemetery,” said Lawn Haven business partner and Rodney’s father, Russell Muffley of Clovis Muffley Funeral Home. He said regulations on prepaid funeral sales got a lot tougher in the 1980s due to consumer complaints.

Now, New Mexico funeral homes that offer prepaid packages — which most often include the cost of a casket, preparation of the body, and the funeral itself — must contract with an insurance company, said Steed-Todd Funeral Home manager Joe Champouillon, also a licensed insurance agent. That way the money deposited becomes an insurance policy which accrues interest and a third party is involved in the transaction, Champouillon said.

Though a policy can be easily transferred out-of-state or to another funeral home, the receiving funeral home is not obligated to honor the specifics of an agreed-upon funeral contract, according to Purrington.

“The only caution I would give people applies to any type of transaction: People need to be very sure of what they are doing and how it works. What is being selected from the onset should be crystal-clear to the people who are putting the money into it,” Purrington said.