It has recently been estimated that the average funeral in the United Kingdom costs around £9000. Although the death of a loved one is always difficult, it is important to understand the different ways that a funeral can be financed. This article seeks to outline the different options that are available for those who need to arrange a funeral.
Some people put money aside during their life which can be used to pay for their funeral. This is normally done as part of a pre-paid plan or a funeral insurance policy. It may not always be obvious that the deceased had taken out one of these policies or plans; therefore it is a good idea to check their paperwork before making any arrangements.
Pre-paid plans have usually been taken out with a specific funeral director or chain of funeral directors. In order to access the plan funds, the person who is arranging the funeral must use this company. The deceased may have already discussed their ideas with the funeral director and set aside enough money to pay for their ideas. If you want any extras for the funeral of a loved one with pre-payment plan, you will need to pay for these on top of the plan payment.
Alternatively, some of the costs may be covered by a lump sum payment from a funeral insurance policy. You should contact the insurance provider to check how the sum will be paid and how much the policy is worth. Once the money is paid out, it can be used with any funeral provider.
Paying with the Deceased’s Account
In some cases, it may be possible to pay for a funeral directly with money from the deceased’s account. However, it is not always possible to access the account before the funeral, so this method should not be relied on for immediate payments. It will often depend upon the type of bank account that the deceased has and whether you are considered to be the legal executor of the will.
In some special circumstances, the bank may allow essential payments to be made from the deceased’s account without the permission of the executor of the will. You will normally be required to provide proof of your identity, onwards contact details and a copy of the death certificate. To ask the bank to release funds for essential funeral costs, you will also be expected to provide a clear invoice showing essential funeral costs which are clearly relating to the death of the holder of the account.
You should never take money from an account without discussing it with the bank first, even if you have the deceased’s PIN number or if you have been given prior power of attorney. Taking money from the account of a deceased person without following the correct legal procedures may be a crime.
Some funeral directors may allow payment in instalments. Those who allow payment plans are permitted to charge interest on the cost of the funeral if they wish. Although they normally try to keep interest as low as possible, this can mean that the total costs of the funeral are higher overall.
Recovering costs from the estate
The person who pays for the funeral should be able to recover these costs from the estate. Secured debts, such as mortgage costs, are normally paid first, and then funeral costs are paid. However, the estate may not be large enough to pay all of the funeral debts after paying essential secured debts. This means that you may not be able to reclaim all of the costs that you paid.
It is always worth checking with the administrator of an estate before you start to make any arrangements for funeral. They may be able to give you a rough estimate of how much money is available to spend on funeral costs. They should also be able to explain the process of recovering this money, as this will help you to plan accordingly. The recovery process can take month if there are complications, so it is important to consider whether you might be affected by financial complications before the funds are recovered.
Applying for Funeral Payment
People on a low income may be able to receive government assistance to pay for a funeral. This money helps to cover some of the costs associated with a simple funeral. Applicants are expected to arrange a very simple funeral, so that they do not end up falling into debt. The size of the payment which is offered by the government will depend on a number of factors, but most applicants will still have to cover some of the costs themselves. If there is any money in the estate, the government will seek to reclaim the costs. However, they will not normally try to reclaim the money from a shared estate if reclaiming could cause hardship to the surviving spouse.