Prepaid Funeral Plans for peace of mind
A bereavement and the funeral affects loved ones emotionally and financially. An overwhelming number of decisions need to be made quickly and often under a high level of stress. Even more difficult, is the financial impact of paying for funeral arrangements, often at short notice. Funeral expenses can range from around $5,000 to over $15,000 and they are often a family’s third largest expense; after paying for a house or car.
What is a Funeral Trust?
It is designed to cover, or contribute toward, the cost of your funeral expenses. Money deposited into a Funeral Trust by you cannot be withdrawn until after you pass away (unless you permanently migrate overseas). So, you can be assured that the money you put aside will only be used to contribute toward your funeral expenses. Funds are then available to be paid out to either the funeral director, or to the person who produces evidence that your funeral expenses have been paid by them. Any balance remaining that is not required to meet your funeral expenses, will be forwarded to the person administering your estate, for distribution in accordance with your Will.
What will it cost?
The minimum initial contribution to establish your Funeral Trust is $2,000. An Establishment fee of $150.00 is applied to set up a Trust in your name, and there is a $320.00 Admin fee. You can continue to add to your Funeral Trust with minimum deposits of $1,000 at a time, or alternatively you can set up a direct debit authority for making smaller contributions more regularly. There is no maximum amount you can hold in your Funeral Trust, although asset testing may apply to amounts over $10,000.
Setting up a Funeral Trust Asset Testing Exemption
If you wish to receive the residential care subsidy, you are required to have a financial means assessment. This assessment includes an assets and income test. Currently up to $10,000 of any prepaid funeral of a person or their spouse is exempt from the assets test and any interest generated from the prepaid funeral amount is exempt from the income test. Therefore, you can set aside up to $10,000 for your funeral and still qualify for the residential care subsidy.