Losing a loved one is painful as it is. The cost of a funeral can be an unexpected burden. A future interment master trust is a great way to financially prepare for a funeral and alleviate that burden on loved ones. It allows you to prepay for the costs and account for possible increases due to inflation. Planning ahead with a funeral trust can also help you ensure that your final wishes are respected. 

The national median cost of a funeral in 2019 was $7,640. Of course, many factors contribute to the final price of a funeral, including the type of casket selected, the venue in which the ceremony is held, the type of burial chosen, transportation fees, catering, and more. These costs also tend to increase over time due to inflation. Paying for these costs in advance through a funeral trust of a pre-paid funeral plan can help you lock in today’s rate or plan for tomorrow’s. 

What is a funeral trust? 

A funeral trust, or future interment trust, is a legal tool used for pre-planning and funding a funeral. The funeral trust is a legally binding agreement between the person planning their funeral and a funeral home or burial service provider. There are three main parties in a funeral trust. First, the person who is planning and paying for the funeral ahead of time is referred to as the “trustor” (or sometimes the settlor or grantor). Second, the bank, trust company, or funeral home that will manage the trust is referred to as the “trustee.” And third, the funeral home that will receive the funds to provide the goods and services determined in the trust is referred to as the “beneficiary.” 

What is a master trust? 

A master trust is a type of investment vehicle that pools assets for collective control and management. Master trusts can be used for pensions and benefits, investors who want to pool investments together, or other financial situations. In the case of pre-paid funeral plans, a future interment master trust uses those assets to cover end-of-life services.

When you prepay for your funeral and burial services, Bateman-Allen Funeral Home places the funds in a Future Interment Master Trust where interest is earned until it is needed. This assures that even if the cost of the funeral goes up, the funds are there to pay for it because of that interest.

Revocable vs. irrevocable funeral trusts

A revocable trust allows the trustor (you) to maintain control over the assets in the trust. This means you can make changes to the trust at any time or even dissolve the trust altogether if you so choose. Revocable trusts are a good option for those who want to maintain the ability to make changes to their arrangements in the future. However, the principal of a revocable trust is considered a countable asset. This means that it could affect your Medicaid eligibility. If Medicaid eligibility is important to you, you may want to consider an irrevocable trust instead. 

An irrevocable trust cannot be changed or dissolved after it is made, as the trust becomes its own entity rather than remaining an asset of the trustor. Because the funds of an irrevocable trust can only be used to cover your final expenses, it is considered a non-countable asset. This means it will not affect your total wealth or Medicaid eligibility, and future lawsuits or creditors are not able to draw from this trust. However, it is important to note that an irrevocable funeral trust must be purchased within five years of acquiring Medicaid benefits in order to be excluded from your assets that determine Medicaid coverage. 

Choosing between a revocable and irrevocable funeral trust is an extremely personal decision that heavily depends on your financial situation and your goals. You can discuss the details of your situation with a trusted funeral director and/or with a tax professional to ensure you make an informed decision. 

Why have a future interment master trust? 

Lower costs 

One of the benefits of establishing a funeral trust with your local funeral home is the ability to “lock-in” today’s price. Ultimately, you end up saving money because you are paying today’s rates for the funeral, and not the rates that will be in place at the time of need. 

More planning time

Planning a funeral can be a stressful experience. Without a pre-paid funeral plan, loved ones will have to make several important and costly decisions in a short amount of time (usually only a few days). A pre-paid funeral plan not only alleviates the burden of cost but also helps guide your loved ones in planning a funeral that honors your wishes. It gives you the opportunity to specify the details of your funeral and burial, including a casket or urn preference, headstone ideas, visitation and viewing preferences, funeral or memorial procedures, graveside service, venue, religious preferences, speakers and attendees, and more. 

Rather than guessing what you would have wanted, loved ones can be sure because they can see it in writing. Pre-paid funeral plans can be as specific or flexible as you like. Be sure to communicate your wishes with the funeral home and with your loved ones to ensure they are understood and incorporated into the pre-paid funeral plan. Your funeral home should also provide you with a copy of their records for your own safekeeping. 

Flexible Payments

Funeral trusts can be paid for all at once or in installments over time. Once you determine the amount of money you would like to dedicate to the funeral trust, you can consider your funding options. Cash, certificates of deposit (CDs), savings bonds, life insurance, and payment plans are all options you can discuss with your trusted funeral director. 

Reduced Stress

A future interment master trust and pre-planned funeral can provide immeasurable relief to a grieving family. The financial and mental strain of planning and paying for a funeral can be challenging to face while dealing with a difficult loss. A pre-paid funeral plan offers you and your loved ones peace of mind knowing that funeral expenses have been pre-paid and the arrangements have been planned. 

How do I make a future interment master trust part of my funeral arrangement?

To set up a funeral trust, the first and usually most straightforward part of the process is determining the trustee. Any competent adult under 99 years old can qualify for a funeral trust. While funeral trusts are most often set up by people who are 50 and older and planning for themselves, funeral trusts can also be created for immediate family members like spouses, siblings, children/stepchildren, and parents.  

Once you have a trustee in mind, whether it is yourself or a loved one, you’ll want to consider which funeral home to partner with. Find a local, trusted funeral home with a history of exemplary care and kindness. It is important to feel comfortable with the funeral director and staff you’ll be working with throughout the process. 

Consider consulting an attorney and or tax specialist. While a funeral director can help you with planning, the details of your financial and tax needs are best worked out with a specialist. Also, be sure to research your state’s specific rules and regulations. If it is possible that you will relocate between now and the time the funeral trust will be used, confirm whether you can move your trust across state lines. 

You’ll also want to make your family members aware of your plans. Specify and executor of your trust (whether it be a close loved one or a legal entity) and provide them with copies of the trust, the funeral home’s contact information, and any other important documents and contacts. 

If you would like to learn more about funeral pre-planning or are ready to make an appointment, contact Bateman-Allen Funeral Home by calling 610-876-5237 to talk or schedule a time to meet with Charles or Eve to discuss your options and make a plan. We can walk you through the next steps.