Money for a Funeral Service or Cremation Service
A Memorial Service Can Vary in Cost and Complexity, and Planning
by Alan Simpson
Everyone dies. It costs money to process a body, have a funeral service and maintain cemeteries. How much, what is the money source, and who provides the funds?
A simple funeral chapel memorial service is at least $3,000 and a highly tailored one can exceed $20,000. The cost of an average memorial service in the USA is $7,323 (National Funeral Directors Association, January 27, 2010). An in-ground burial or a cremation service is similar in cost.
Grave diggers are expensive to keep on staff, so large, modern cemeteries require coffins to be encased in a concrete grave liner. The coffin will collapse under the weight of the soil after a few decades. The soil at a recent grave site will settle. Either means removing the sod over the site and adding leveling soil, then replacing the sod. Headstones often must be ground-level slabs that are easy to mow over. It is about keeping the cemetery looking nice and making upkeep easier.
Memorial Services Vary
Local governments or religious groups arrange pauper’s funerals. Taxpayers contribute about $1,100 for the funeral services that includes a death certificate, burial permit, embalming, suitable burial garment, casket, hearse, clergyman, and burial place or cremation.
Funeral Societies are mostly not-for-profit. There are US companies offering discount funeral services for around $1,000.
A Green Funeral is an earth-friendly way to bury an unembalmed body in a biodegradable casket without a burial vault or a grave liner. The body is usually cremated before burial. A green funeral can cost half as much as a regular funeral service.
It is possible to have a home funeral. Family and friends wash and dress the body, dig the grave, and conduct the interment in private sites near some meaningful place, much like on an Old West movie. The average home funeral can cost as low as $250, but typically averages about $2,000.
The most flashy cremation plan rivals the pomp of the ancient Egyptians. A cremated body is loaded into a rocket and fired into space. Memorial Spaceflights offers their Voyager Service launch into deep space, beginning at $12,500.
Where Does the Money Come From?
The Veteran’s Administration will pay $255 toward a headstone for a military veteran.
Estate assets are sold to pay the costs. The IRS gives 90 days to pay Inheritance Tax. The IRS values the estate using the willing-buyer-willing-seller test, the price where a willing seller, under no duress, would be able to sell his property to a willing buyer, also under no duress. Estate sales take in, typically, 10% of value, less the auction house’s commission.
Pre-payment agreements through local mortuaries allow the future departed to choose the services important to him. This prevents family from having to make financial decisions when under the burden of grief. It also allows a person to lock-in a price for a funeral that won’t increase with inflation.
Life insurance pays off in as little as two weeks. Premiums are cheaper for healthy, young people.
Term insurance is for terminating needs, like 60-month car payments or commitments that end, like after the kids turn 18 and become independent. Term insurance premiums begin quite a bit cheaper than Permanent, but increase each term renewal. The policy will expire after a specified length of time or after an attained age.
Anything longer than 12 years is probably better served with Permanent Insurance. Over a lifetime, the total premiums will be about the same for Term and for Permanent (younger buyers pay less for longer, older buyers pay more for shorter times).
A person chooses how much they want to leave, and provides that full amount from the first premium payment. It is pre-sold back to the insurance company at their death, with no handling expenses. The most expensive policy is about 1.5% per year ($100,000 Whole Life, premium $1,501 annually for a male, age 35, non-smoker – State Farm Life Insurance series).
Have an Estate Plan
With a sizable estate, comes a responsibility to manage it. Estate planning will enable wealth to be passed on after death in the best way possible. An informal plan can be as simple as a will, listing each asset and to whom it should pass. Lawyers provide formal planning.
Each state has a standard will for anyone who dies intestate, or who dies without a will. Assets will be distributed to a relative, if possible. Then stored, sold, and added to the state general fund after a time.
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