A pre-paid funeral is a funeral purchased in advance from a funeral director, either by paying in one lump sum or through a payment plan, as decided at the time of signing the ‘contract’.

The costs associated with a funeral vary due to the number of choices available. Please also see our article on How Much Will a Funeral Cost?

Your preferences for the type and style of funeral you want (as listed  in our Pre-Arranged Funeral section) is documented in a written contract and paid for at current prices. Subject to any specific terms of a pre-paid funeral contract, (eg if Government taxes are subsequently imposed or increased), the client’s family will not have to pay any additional amount for that contracted funeral, regardless of when the funeral is required.

However, please note, that most prepaid contracts do not include the cost of a burial plot, and possibly cremation fees and some other expenses (eg administration fees), which will need to be paid by the family at the time of the funeral.

Pre-paid funeral funds are invested with an independently managed funeral fund, and are only released to the funeral director once the contracted funeral service is completed, in strict accordance with the various State Acts and Regulations (see our links below). In essence, such a pre-paid funeral ‘contract’ is an example of a funeral bond.

As consideration for the funeral director taking on the liability of a prepaid funeral, the funeral bond that is normally used to ‘invest’ the funds is assigned to the funeral director by the ‘investor’. This transfers the ownership of the prepaid contract (funeral bond) to the specified funeral director. The funeral director may include an extra fee to offset the risk of potentially holding a prepaid contract for a long time.

By taking out a prepaid contract the ‘investor’ loses the flexibility to change their funeral arrangements to another funeral director.

Should you move to an area where the selected funeral director is unable to provide the funeral service, you can apply to have the prepaid contract (funeral bond) transferred to another funeral director. The original funeral director may charge a fee to release the prepaid contract.

A pre-paid funeral does not impact on a pension entitlement, as it is not subject to an income or asset test or the ‘deemed earnings rules’ according to current legislation.

Please see our Useful Links – Pre-Planning a Funeral below, for further information.

It is important that your family or friends are advised that arrangements for your funeral have been made in advance. Copies of the pre-paid funeral contract should be provided to your family or friends, or filed with your Will and other important documents.

PRE-PAID BURIAL PLOT

A burial plot is either a specific place (for example, a cemetery plot, interment niche or mausoleum) or a right to be interred at a general location (for example, in any available plot in a specific cemetery).

It is almost always less expensive and less stressful to purchase cemetery plots or crypts in advance, rather than purchasing them after a death has occurred.

If you are wishing to be buried or interred alongside family members, you may want to consider purchasing multiple plots or crypts not only to save money, but also to ensure that the cemetery will be able to meet your needs when the time comes.

Cemeteries often give discounts for multiple plots purchased together. Most cemeteries have the option of either single, double or triple depth plots, whereby more than one deceased can be buried.

Before making any purchases, it may be wise to discuss your plans with your family members and to make sure that the arrangements you’re making meet everyone’s needs. It may also be a good idea to consider what will happen to the plots or crypts you’re purchasing if family relationships should change (marriages, divorces, re-marriages, etc.).

Pre-purchased burial plots will not be included in your assessable assets for the age pension, regardless of their value. You are not required to tell Centrelink if you own one.

Please use our Business Directory Search facility to find ‘Funeral Directors‘ and ‘Cemeteries and Crematoriums‘ in your local area.