Although thinking about your own death, and the subsequent funeral and burial, may not be something you enjoy doing, it is wise to do so as part of your comprehensive estate plan. Including a funeral planning component in your estate plan ensures that your wishes are honored when the time comes and protects your loved ones from having to make difficult decisions during a time of heightened emotions and increased stress. One estate planning tool often included in a funeral component is a funeral an Irrevocable Life Insurance Trust (ILIT), often referred to as a funeral or burial trust. The Vernon Hills trust attorneys at Hedeker Law Ltd., explain funeral and burial trusts and illustrate how one might work within your overall estate plan.
Why Include a Funeral and Burial Component in Your Estate Plan?
For obvious reasons, no one really wants to spend much time contemplating their own mortality, much less the details of their own funeral and burial. On the other hand, if you are like many people, you do have strong opinions about the disposition of your body and about the type of service held for friends and family after your death. For these reasons, including a funeral planning component to your estate plan may be a good idea. In the absence of a plan, your loved ones will have to make all those decisions in the hours and days after your death. As you may well imagine, your loved ones will still be grieving your loss and likely not thinking clearly. This may cause them to make poor decisions, and may make it easy for salespeople to push them into paying much more than they should for your funeral and burial. Moreover, the over-priced service may not even be what you wanted! Finally, if you have not already arranged for the financing for your funeral and burial, your loved ones will also be forced to try and figure out how to come up with the necessary funds in the midst of trying to deal with their loss.
Funeral Planning Options
Deciding to address your funeral and burial now is the first step. Next, you need to decide the best way to do that. Simply telling your spouse or adult children what your wishes are is not sufficient for a number of reasons. First, there is a very good chance that your wishes will be forgotten, or important details overlooked, because your spouse/child won’t be thinking clearly at the time. It is equally possible that your wishes will be intentionally overlooked if your loved ones do not agree with those wishes. Worse still, a full blown family conflict could arise if loved ones don’t agree on the details of your funeral and burial. Finally, simply telling someone what your wishes are does nothing to provide funding for those wishes to be honored.
Another option is to enter into a pre-paid funeral contract; however, that also has some disadvantages. The biggest of those is the very real possibility that the funeral home you choose will go out of business or change hands before your death, leaving it up in the air whether your contract will be honored and, if so, by whom and how?
Why a Funeral and Burial Trust May Be the Best Option
One option that is often recommended is to establish a trust as part of your funeral planning component. Specifically, an Irrevocable Life Insurance Trust, or ILIT, is frequently used because it addresses most of the disadvantages of the other options. With an ILIT, you create an irrevocable trust that is funded using a life insurance policy that names the trust as the beneficiary. Upon your death, the life insurance policy pays out into the trust, thereby providing the funding for your funeral and burial. Best of all, as the Settlor of the trust, you can use the trust terms to ensure that your funeral and burial wishes are honored. The person you name as Trustee of the trust is legally required to follow the terms of the trust exactly as you have written them, ensuring that all aspects of the funeral and burial will be as you wish them to be. You can create fairly general terms or extremely detailed terms.
Contact Vernon Hills Trust Attorneys
For more information, please download out FREE estate planning worksheet. If you have additional questions or concerns regarding funeral planning or ILITs, contact the experienced Vernon Hills Trust Attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.