Pre-Need Trust Agreements

by MSO

The money you invest in a pre-need trust can increase in value over time.

Funeral trust agreements are accounts covered by a monthly payment which is invested in a fund that increases in value over time and is invested in cemetery property or funeral arrangements. With payments going into a trust fund, the money increases in value over time allowing for the investment to keep in relative pace with inflation. During this time, the trust fund is monitored by a board of trustees and is unavailable to the funeral home or cemetery until the time of death.

When the funeral trust agreement is chosen, it outlines, in detail, the space or services purchased. As well, the agreement will show the payment arrangement that has been made and the initial deposit that both the facility and buyer have established.

However, while there are advantages to having a trust account, there are some disadvantages, including the requirement that they be paid in full – meaning, if you make payments into a trust account and die before the account is fully paid, the responsibility then falls onto the family to cover the remainder of the funeral costs.

A secondary concern with trust accounts is that a trust fund may be vulnerable to taxation.

It is important that when choosing a Pre-Need Trust Agreement, the following questions be addressed:

* If I choose a funeral director who goes out of business, what happens to the trust fund?
* How is my money protected over the years?
* If relatives decide to organize the funeral independently without knowing about the pre-paid plan, what happens to the money?

Some important factors to consider when choosing a Pre-Need funeral are:

* Asking for a guaranteed price plan that protects you from future price increases;
* Ensure that the funds in your pre-need trust increase in value and understand where the money is being invested and who the trustees are;
* Find out if it is obligatory to pay the entire amount into the trust up front or if it can be paid over time, as well as if there are penalties for late payments;
* Ask if your funeral planning arrangements can be transferred to another funeral.

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