PREPAYING A FUNERAL
There are two types of Funeral Trusts in New Jersey. Also, Insurance assignments may sometimes be an option.
A Revocable Trust Fund can be opened by anyone to pay for future funeral expenses. With a Revocable Funeral Trust, the trust can be closed at anytime without penalty. All interest belongs to the purchaser of the trust fund. Also, this trust can be transferred to any other funeral home in New Jersey Prepaid Funeral Trust Fund.
For example, if you choose funeral options that total $6,000.00 you can opt to fully fund the trust with $6,000.00 or, you can open a trust with a minimum of $500.00 and add funds to it over time. You can send a check to the funeral home (made out to the New Jersey Prepaid Funeral Trust Fund) where we will fill out the paperwork and deposit it into your account, or we can set up a Flex Trust where you pay a deposit to open the account and pay the balance over 12, 24, 36, or 48 months.
If, at the time of death, your account has less money than the total cost of the funeral, your family will pay the difference. If your account has excess funds, the remaining balance (including any interest that has accrued) will be returned to your next of kin. This type of trust can also be converted to an Irrevocable Trust Fund if the need arises.
An Irrevocable Trust Fund is opened when the funeral recipient is going onto SSI Medicaid. This is the type of trust your social worker or lawyer is talking about if they tell you to spend down your assets or to prepay your funeral. An Irrevocable Trust can only be used to pay for the funeral expenses of the funeral recipient. This type of trust fund can not be cashed in for any other purpose. The money set aside in this trust fund does not belong to the funeral recipient anymore. Any money left over after the funeral has been paid for goes back to the state of New Jersey.
For example, let’s say you put $5,000 into an Irrevocable Trust where your estimated funeral costs are $6,000. Then, at the time of death, your family changes some aspects of your funeral and the costs settle at $4,500. The $500 remaining in the trust fund, plus any interest accrued, would go to the State of New Jersey. This type of trust fund can also be transferred to any other funeral home in New Jersey that participates in the New Jersey Prepaid Funeral Trust Fund. An Irrevocable Trust Fund can be funded using the same options as described above under Revocable Trust Fund.
Insurance Assignments are not an available option with every insurance policy. Insurance Assignments are more complicated in that each insurance company has their own way of handling them. With Insurance Assignments we will gladly meet with you to learn about the type of policy you have and explore what would be the best option for you and your family.
Our goal is to help guide you and to educate you about what options are available. We encourage you to call and make an appointment to come speak with a funeral director for further clarification about the different options available. As with preplanning, there are no charges for consulting with us about prepaying for a funeral.