Here in Kennett Square, one of the trusts that can be used to ensure that survivors will not have the trouble of funeral concerns is a burial or funeral trust. A funeral trust is a set up by funeral homes or cemeteries as a pooled income fund to which a person transfers properties that will take care of future funeral and burial costs.
However, Pennsylvania residents should be aware that some funeral directors in the state are currently facing charges for failing to handle prepaid funeral funds properly. One of the complaints alleges that one funeral home director stole $8,150 that a woman paid to set up an irrevocable burial trust at a bank.
The woman died last year, and her brother made other burial arrangements because the first funeral home was unreachable. The brother contacted the bank where the fund was supposed to be, but the bank informed him that the trust was never set up. The funeral director's license was suspended last year.
There are several ways that a person can avoid this unfortunate situation. The first is to ensure that the prepaid funeral is under a valid contract. Instead of having a funeral home set up the trust, the person can prepay the funeral costs upfront in cash, or assign a trust personally that will handle funeral-related affairs. To ensure that the fund is not held by the funeral home, the person should also contact the party to whom the burial trust is assigned. Lastly, the person should inform his or her family about the funeral trust.
Many experts suggest the use of trusts, among other estate planning tools, to avoid a lengthy probate. Fiduciaries, like trustees and executors, are assigned to manage the assets. If the fiduciary fails to perform the trust administration satisfactorily, he or she is liable to the heirs for financial losses incurred.
There are different tools to accomplish the decedent's wishes upon his or her death. The best way to ensure that a trust will serve its purpose is to consult a trusted estate planner who can help ease the trouble of looking for the best estate planning tools.
Source: The Morning Call, "Protect yourself when prepaying your funeral," Paul Muschick, July 6, 2013.