Prepaying Your Funeral
Know Your Rights
of the New York State Department of Health
George E. Pataki, Governor
to plan your funeral now? Want to be sure that your family doesn't
have to pay for your funeral?
You can preplan your own funeral and pay for it in advance. But, before
doing so, you should know about New York State's laws that regulate
prepaid funeral money. This brochure explains your rights under the
law, and the decisions you need to make when preplanning or prepaying
your own funeral, or that of a friend or relative.
is the difference between preplanning and prepaying?
You can preplan your funeral WITHOUT paying now. But, be sure to compare
several funeral homes before deciding. It's important to choose a
funeral home that has a good reputation as well as competitive, prices.
Once you've selected a funeral home, you can discuss your wishes with
the funeral director. When your plan is complete, the funeral director
will keep it on file until it is needed. Your estate will then have
to pay for the services at the rates being charged when your funeral
addition to preplanning, many people choose to prepay their funeral
expenses. Prepaying for a funeral allows you to pay for your funeral
ahead of time.
are two ways to prepay. You can enter into an agreement with a funeral
home, and the money will be held in the name of the funeral home as
trustee for you. Or, you can deposit the money in a bank passbook
account for the benefit of the funeral home. Either way, you agree
to pay a specified amount of money, in one lump sum or in installments.
there advantages to preplanning funeral arrangements?
Yes. Preplanning can give you the opportunity to select a funeral
service which will meet your needs and wishes. It can reduce the concerns
of your family or friends who would otherwise have to guess what you
would have wanted for your funeral. A local funeral director can provide
professional advice on this important matter.
there advantages to prepaying funeral arrangements?
Yes. You can have the peace of mind that comes with knowing that the
money needed for your funeral has been set aside. If the funeral director
has guaranteed the funeral, your survivors will not have to worry
about how to pay the bill. When you prepay, the funeral director will
provide a Pre-Need Agreement which addresses many important matters,
such as: how the final expenses will be determined; if additional
funds will be needed when death occurs; what will happen if the merchandise
selected is no longer available; and, what will happen if any money
remains after the final funeral bill is paid.
there drawbacks to prepaying?
Yes. As with any financial transaction, there are potential drawbacks.
While the law gives New Yorkers some of the strongest protections
in the country, it does not provide absolute protection, as the money
is controlled by the funeral director, not you. There are some things
you must study carefully before entering into a prepaid funeral arrangement:
sure you always have a pre-need agreement for services whenever you
prepay a funeral, whether it is directly with a funeral home or on
your own with the funeral home as a beneficiary.
Let someone you trust know that you have prepaid your funeral arrangements
and the name of the funeral home. Otherwise, they may select a different
funeral home and pay again.
Always deal with a funeral home with which you are familiar and comfortable,
or that has been recommended by someone that you trust.
Know how and where your money is being deposited.
If you pay by cash, get a receipt and keep it in a safe place.
do I prepay my funeral?
Contact several funeral homes to compare prices. It's also important
to choose a funeral home with a good reputation within the community.
Once you've made your choice, meet with the funeral director. Prior
to making any selections, the law requires the funeral director to
A General Price List with the current prices
for any merchandise, services and facilities offered by the funeral
A Pre-Need Itemization Statement that lists
the items of merchandise, services and facilities you have chosen,
and the price of each. You can leave the details of some items open
until you have made a final decision, or until you have chosen someone
to make these decisions for you.
A Pre-Need Agreement that outlines all the
terms, as well as your rights as the purchaser. It must also state
how the principle and interest will be applied to the cost of your
funeral services and merchandise at the time they are provided. Funeral
homes may offer a "guaranteed" funeral or a "non-guaranteed"
funeral in the agreement.
is a "guaranteed" funeral?
With a guaranteed funeral, the funeral home guarantees to provide
the services, merchandise and facilities you selected for the amount
of money in your account. The guaranteed funeral is not affected by
future price increases since the funeral home accepts the principle
and interest as payment-in-full. Your estate will not have to pay
anything extra for those items that are guaranteed. A guaranteed funeral
will not include certain items, such as cemetery costs, clergy fees,
death certificate fees, etc. However, the funeral home cannot charge
more than its ACTUAL cost for these cash advance items.
is a "non-guaranteed" funeral?
With a non-guaranteed funeral, the funeral home provides the items
and services you selected, at the rates being charged at the time
of your funeral. The principle and interest of your account will be
applied to the funeral home's total charges. If this amount does not
cover the expenses, your estate will be charged the difference. If
the amount in your pre-need account is greater than your funeral costs,
the excess money will be refunded to your estate [unless it is irrevocable].
it possible to prepay cemetery, crematory, clergy and death certificate
Yes. But many funeral homes prefer not to include these expenses because
they have no control over them. If you want to prepay these expenses,
they will probably be non-guaranteed. As an alternative, you can deal
separately with the cemetery, crematory or monument dealer.
happens to the money I prepay to a funeral home?
The funeral director must deposit your money within 10 days in an
interest-bearing account or a government-backed investment, such as
U.S. Treasury bills.
will I know my money has been deposited?
The funeral director must notify you where your money has been deposited
within 30 days of the deposit. Also, the location and amount of interest
earned will appear on the IRS form 1099-INT (or equivalent) sent to
you in January of each year. Check the account information carefully
each year. Also, upon your written request, the funeral home must
advise you of the total value of your account, including principle
I responsible for paying income taxes on the interest earned by this
Yes. It is still your money
I get my money back if I change my mind?
If you established a REVOCABLE agreement, you can withdraw the principle
and the accrued interest at any time. The funeral director cannot
charge any processing or administrative fees, or penalties for early
withdrawal. However, if you established an IRREVOCABLE agreement,
you cannot withdraw any principle or interest ever.
is an irrevocable agreement established?
You must establish an irrevocable agreement if you are applying for
Medicaid, or if you are applying for Supplemental Security Benefits
under Section 209 of the Social Services Law. These are the only instances
for which an irrevocable preneed agreement may be established. The
moneys paid to fund these agreements may not be refunded under any
there is an irrevocable agreement, can I change funeral homes?
Yes, the moneys may be moved from one funeral home to another. To
have the moneys transferred, notify the funeral home in writing of
your new choice of funeral home. The moneys must be transferred within
10 days of the receipt of your request.
moneys are left in an irrevocable account after the payment of funeral
expenses, is the money returned to my estate?
No, any moneys left in an irrevocable account must be paid to the
my next-of-kin change my preplanned or prepaid funeral arrangement?
Yes. Changes in the funeral arrangements you have chosen can be made
by your next-of-kin when death occurs. If you do not want the arrangements
to be changed, you should speak with an attorney. An attorney can
advise you what additional legal documents, beyond the preneed agreement,
are needed to prevent any changes.
happens if the home sells its business to another funeral home?
Both funeral homes must provide written notification to you WITHIN
30 DAYS of the sale. At any time, you can: change your arrangements;
request your money back with interest; or give written authorization
to transfer the funds to another funeral home.
happens if the home goes out of business?
The funeral home must return your money, with interest, or you can
give written authorization to transfer the funds to another funeral
home. The funeral home must notify the NYS Health Department of the
disposition of all of the money being held in trust for Pre-Need Agreements.
If the funeral firm fails to notify the NYS Health Department, and
the funeral firm owner relocates, it may be difficult to get your
confirm that the NYS Health Department has been notified that a funeral
home has gone out of business, call the Bureau of Funeral Directing
at (518) 402-0785.
can I do if I am treated unfairly?
If you think that you have been a victim of unfair or illegal practices,
you can file a written complaint by writing: Bureau of Funeral Directing,
New York State Department of Health, Hedley Park Place, 433 River
Street, Suite 303, Troy, NY 12180-2299. In addition, the state Attorney
General can seek a court order for restitution and issue fines.
more information on preplanning or prepaying, see your local funeral