A timely gift

A Pre-paid Funeral
By Michael Osborne

My parents gave me the gift of life by bringing me into this world, now they have given me the gift of a worry free exit – they have bought me a pre-paid funeral. It may sound a bit strange when you first think about it but then consider the advantages. The cost of a funeral continues to go up, therefore this gift has given my children and I the security of knowing that my departure has been organised and paid for. Currently, money invested in pre-paid funeral funds is not subject to either the assets or income test. Your contribution however, is not tax deductible as you are making a contract for a service rather than an investment.

What is a pre-paid funeral?
A pre-paid funeral is when you and a funeral director determine your funeral arrangements and the service you want for the future. You have to sign a contract detailing the arrangements and pay the money in advance. As with everything, the best advice is to shop around. Some pre-paid funerals can be paid either by a lump sum or through instalments. Once you have paid for the service, no further costs should be involved. You should receive the service you arranged and paid for, even if you don’t need it for many years to come. The money you pay to a funeral fund is invested and should be protected against inflation. Be sure to ask about the conditions which apply to your contract as these may differ from company to company.

Contracts
- Make sure you read and understand the contract, and if necessary, get independent legal advice.

- You and the trader can alter all contracts through negotiation, even those called standard.

- At signing, obtain a copy of the contract and keep it in a safe place. You or members of your family may need to refer to it in the future.

Is the investment protected?
Funeral directors are required to safeguard your investment by:

- Providing a numbered written contract issued in your name with full details of the funeral and service you have agreed upon.

- Giving you a fixed price specified in the contract.

- Investing your money with an approved investment manager.

- Guaranteeing to supply the funeral even if the financial institution holding the investment has gone out of business.

The approved investment manager should:

- Guarantee that no funds can be withdrawn by the funeral director until the funeral takes place.

- Guarantee that the service will be conducted to your exact specifications.

- Ensure that your funds are safeguarded even if the funeral firm has gone out of business.

The above information is of a general nature and should not be regarded as a substitute for professional advice and/or reference to the appropriate legislation.