Should You Prepay Your Own Funeral Expenses?

Be warned: Not all contracts deliver on their promises.

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Consider saving on your own. Instead of prepaying money to a funeral home you can set up a "pay on death" account, also known as a Totten trust. At the time of death your designated beneficiary is able to use that account for funeral expenses immediately. These accounts are portable and can be used at any funeral home, and you get to accrue the interest instead of the funeral home. You should also put your preferences in writing, give copies to family members and your attorney, and keep a copy in a handy place. But don't designate your preferences in your will, as a will is often not found or read until after the funeral, and avoid putting the only copy of your preferences in a safe deposit box that could be difficult for relatives to get to.

Ponder cheaper (and greener) options. A full service burial at a funeral home is not the only option. "People should be able to find a crematory in their area that is under $2,000," says Buddy Phaneuf, a fourth-generation funeral director and president of the Cremation Society of New Hampshire. And AARP found that 21 percent of seniors expressed interest in a burial that is more environmentally friendly than a traditional burial with embalming. "It's a funeral that does not involve the use of toxin or waste," explains Joe Sehee, founder and executive director of the Green Burial Council. "No formaldehyde-based embalming, which is not required in any state, no metal caskets, no concrete burial wall." But unlike many environmentally friendly innovations, this one can actually save you money. "In some markets it is as low as $1,500," Sehee says.