Unexpected funeral costs – 3 financial lessons that could protect your heirs

In a little less than 18 months, I lost three treasured family members. First, my husband's 94-year-old grandmother, Nana, passed away in late 2013 and was laid to rest just before Thanksgiving.

At the end of December 2014, my sister Deborah died suddenly and completely unexpectedly. Debby was a 49-year-old healthy, vibrant person, the mother of an 11-year-old daughter, and the most caring individual I've ever known.

Five weeks after Debby's death left my entire family reeling, our dear Uncle Otis, who was like a father to me, passed away from cancer at the age of 75.

Needless to say, the emotional pain of these losses has often felt unbearable. But for many individuals, unexpected financial expenses may arise that add to the grief they experience as well.

Best laid plans

An alarming 2015 survey from Caring.com showed that nearly half of all parents don't have a will or living trust. Even if you don't have children, make sure other aspects of your will are airtight, too, in order avoid or minimize the possibilities of legal challenges and family squabbles in the wake of your death.

“Wills and estate documents can be a touchy subject, but they are necessary conversations to have,” says Andy Cohen, CEO of Caring.com.

Fortunately for my family, each of my deceased loved ones was a planner. In fact, by most standards, my relatives did all the right things. They each had prepared legal and medical documents. All three were parents and had wills. Plus, my sister, uncle, and grandmother-in-law all had life insurance or assets they left to surviving beneficiaries.

Still, a host of unexpected events and financial expenses occurred following each of their deaths. One unsettling eye-opener I've had to face is simply this: Despite that people do some estate planning in advance — as financial advisors, legal pros and other experts rightly suggest — some of the best laid plans can go awry.

My relatives' deaths, and the aftermath of each situation, have shown me at least three costly surprises that can occur when a loved one passes away.

1. Naming a guardian may not be enough

In her last will and testament, my sister named a guardian to care for her daughter in the event of her death. However, the individual chosen was utterly devastated by Debby's passing and not emotionally prepared to take on guardianship duties.

What happened next was a nightmare scenario that required a custody proceeding over Debby's daughter, costing tens of thousands of dollars in legal fees and magnifying the stress everyone was already experiencing.

While the situation was ultimately resolved, experts say one easy solution could have helped avoid a lot of unnecessary pain and financial drain.

“It's job #1 and mandatory to name alternate guardians in a will,” says attorney John McManus, head of McManus & Associates, a trusts and estates law firm in New York.

An alternate guardian steps in if, for any reason, your first-choice guardian is unable or unwilling to serve in that role.

Alternate guardians — the challenges and possible solutions

Unfortunately, too many people with wills — even conscientious ones like my sister — don't name an alternate guardian either because they never thought about the potential consequences or because it's tough enough to pick the first person that you'll entrust with your children should you die, let alone an alternate person.

With documents he creates for his clients, McManus insists on alternate guardians being named because he has seen too many sad situations where kids have become orphaned, taken in by uncaring or greedy relatives, or even abandoned when an originally named guardian has a change of heart or dies.

Often, the dilemma in selecting a secondary guardian is that the alternate guardian isn't seen as an optimal choice, perhaps due to the alternate's geographic location, busy work life or religious values.

So McManus offers a clever remedy: “We recommend the creation of an advisory group.”

Under this scenario, close family members or friends, perhaps three to six individuals, agree to collectively help ensure a child's well-being, checking in regularly and sometimes even having visitation rights to safeguard a child's educational needs, medical welfare, religious instruction and other important concerns.

“Having the advisory group takes the pressure off of the parents' worrying about who the alternate can be, because they can say ‘I've created a team' … with each of them knowing it takes a village to raise a child.

“The essential notion is that there are really more than one or two people involved, so you're not worried that the alternates are operating in a vacuum,” adds McManus.

Alternate guardians — the challenges of naming a couple

But what if you lack trusted relatives or friends who can function as a team?

Many parents simply choose another team of sorts — a couple — as co-guardians. This tactic, experts warn, still requires a specific alternate guardian to be named in a will.

“The biggest mistake I see in naming guardians is when a husband and wife are named as co-guardians,” says attorney Ann Margaret Carrozza, who specializes in estate planning. “If, for example, I name my brother and his wife as co-guardians and they get divorced (a 50 percent chance), it won't be clear who the kids are supposed to live with and a court will become involved.

“Failure to name a backup guardian means that some strange judge will name one for your children,” Carrozza adds. “This is not an ideal situation.”

2. Even pre-paid funerals may still cost a lot

According to the latest statistics available from the National Funeral Directors Association, the median cost of a funeral in the U.S. in the year 2012 was $7,045. Toss in a vault, as many cemeteries require, and the median cost jumped to $8,343. Today, depending on the burial location and the exact coffin chosen, it is not uncommon for funeral costs to total $10,000 or more.

When Nana passed away, she had pre-paid thousands of dollars for her burial costs — as had her husband who predeceased her. But other expenses — like buying urns, paying for name engravings, and renting a hearse — crept up nonetheless.

Since Nana and Papa (my husband's grandfather) both opted for cremation, their ashes were placed into separate urns. Actually, for Nana, there were two urns that my husband purchased — one for his mom, Nana's daughter, and one for his uncle, Nana's son.

While the cost of an urn can vary greatly (based on the urn's material size and shape) nice cremation urns usually run $100 to $250 apiece, and some extra fancy urns can even run into the thousands of dollars.

A word to the wise

You might think that pre-paying funeral expenses, arranging for cremation, and buying a couple urns would make things pretty straightforward. But the funeral home still charged several hundred dollars each time they did any service such as re-opening and closing the niche to place Nana's ashes next to Papa's or engraving Nana's nameplate on her niche.

3. Transportation expenses really add up

All three of my relatives died in one state and were buried, memorialized or laid to rest in a completely different state.

Nana passed in Pennsylvania and was interred in New Jersey. Uncle Otis passed away in Georgia and was buried in California. And my sister Debby passed away in Texas and was buried in California — in addition to having two separate memorial services in Georgia and New York.

Nobody likes to think about money matters during the grieving process. But as a money coach, I can't help but empathize with families that struggle with the basics of burying a loved one, let alone handling all the transportation and logistical expenses that often result after a death.

All sorts of travel expenses

Not only are there several steep transportation charges involved with actually shipping a body from one state to another, there are also considerable air and hotel expenses for traveling family members that attend out-of-town funerals. Further costs follow when relatives need to travel to pack up a deceased person's belongings or to help get them ready for storage, shipment, sale or donation.

Consider the costs of inheritance

On top of that, family members left behind shouldn't forget the potential for hefty shipping expenses of the things they inherit. These costs can run into the hundreds or even thousands of dollars.

“Certain items pose unique difficulty to transport to the intended beneficiary,” says McManus. “Think about moving a concert grand piano across the country,” he says. “It is important to consider how such costs could deplete inheritances to loved ones.”

Inheriting other specialty items — like liquor or even gun collections — can be particularly thorny. “Wine collections, for example, will require someone with a liquor license to move any amount greater than five gallons across state lines without incurring a tax,” McManus notes.

And what if your grandfather was a history buff who left you his collection of Revolutionary and Civil War rifles? “If a beneficiary receiving a gun does not live in the same state as the decedent, it will be necessary to hire a registered dealer to arrange delivery,” McManus says.

Planning is the best protection

Ultimately, proper financial planning is key, and that includes having a Plan B in case things don't go according to your original intentions for some reason. His solution: “Make sure the will provides for those costs.”

“Expect the best, of course,” says McManus. “But you'll be glad you planned for the worst if you're ever confronted with it.”

Have you prepared a will for yourself? What types of expenses are you planning to address? What advice can you add to help others avoid unexpected funeral costs?

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Bill Fisk
Bill Fisk
5 years ago

I am sorry for your loss. The various charges you mentioned were not a surprise, cemeteries charge for opening and closing a grave or niche, this pays for the people to do it. I am puzzled by the need for a hearse? Was there a service away from the funeral home? The engraver charges for his/her service just like anyone else so again nothing out of line there. If you want to cut expenses for a funeral there are many ways to cut the bill. Have a service at home or a favorite place. The body does not have to… Read more »

Lynnette Khalfani-Cox
Lynnette Khalfani-Cox
5 years ago
Reply to  Bill Fisk

You’re right, Bill, that 24/7 service-based businesses (like funeral home operators) aren’t cheap. I don’t expect them to be. I was really trying to offer some insights to those who haven’t been through burials/funerals before, that even if your loved ones “pre-pay” for their funerals/memorials, you’ll still likely have several bills to cover. To answer your other question: The hearse took Nana’s body from the hospital in PA, and then she went onto NJ. She was ultimately cremated, but we didn’t have any other service away from the funeral home. Good idea, though, about doing something at home. That could… Read more »

Nick @ Millionaires Giving Money
Nick @ Millionaires Giving Money
5 years ago

Very true. We were left with a hefty tax bill on the deceased estate. Fortunately the deceased had insurance to cover the cost of the inheritance tax liability so the inheritance was passed without any financial burden. Then

Lynnette Khalfani-Cox
Lynnette Khalfani-Cox
5 years ago

It’s good financial planning when someone has the foresight to create an estate plan that avoids or covers taxes, so heirs/beneficiaries won’t have that financial issue at all. But hats off to your relative for having that insurance!

5 years ago

Insightful article about a rarely talked-about subject. My husband and I are working towards finding a lawyer who can help us with will & estate planning, and I’d like to include this cost in our plan. Thanks for sharing your experience. I’m very sorry for your losses.

5 years ago

My mother just passed away in April. While she had burial policies, I’ve still got around $1500 to pay off. People need to also make sure that they have irrevocable trusts set up if long-term care is required. Otherwise, while states will tell you that a surviving spouse is not responsible for, say, paying for nursing home care provided by a state’s Medicaid program, the state can (and will) sue the *estate* once the surviving spouse is deceased in order to recoup money paid for long-term care. If an irrevocable trust is in place, then the estate is relatively protected.… Read more »

5 years ago

Sorry for your losses, Ms. Cox.

5 years ago

I would also add that even when planning people need to be careful how they fill out their beneficiary documents for things like investments and life insurance and I would recommend having a reputable third party look over the documents for errors. For example, my MIL wanted all of her children to equally split her investments and her life insurance. However she had filled out the beneficiary forms such that my wife got everything with the siblings only inheriting if my wife pre-deceased her. One small screw up on the forms that my MIL repeated because it made sense to… Read more »

Gary @ Super Saving Tips
Gary @ Super Saving Tips
5 years ago

So sorry for your losses. My wife and I have wills as well as living wills and have made our wishes for our final arrangements known. It’s also important that those close to you know where to find information on your insurance policies and accounts. The best advice I can offer regarding funeral costs is to check out the Funeral Consumers Alliance. Not only do they have objective advice on funeral planning and expenses, but joining the local chapter gave us access to local price comparisons and membership discounts. It can be difficult to absorb all the information when you’re… Read more »

5 years ago

We lost three of our four elderly parents last year. The cost of a simple funeral with one night visitation was $14,000. Times three people. Luckily
they had savings. Of greatest importance is the living will, powers of attorney paperwork. Near the end a Do Not Resuscitate form must be signed by the dying person while still of comprehending mindset. This form tells the doctors that if he/she dies, the
patient doesn’t want to be resuscitated back to life.