Should I Include Funeral Planning in My Estate Plan?

 Posted on October 14, 2022 in Estate Planning

Estate planning most commonly considers the property left behind by a recently deceased individual and how it should be disposed of, in addition to potential end-of-life situations and the care desired by the planner in the event of future incapacity. These topics can be challenging to contemplate, as they force the planner to contemplate their own mortality. Often overlooked is planning of a practical nature for how the family is to proceed in the immediate aftermath of the estate planner’s passing.

In California, there are legal mechanisms by which a person can effectively make arrangements for their own funeral services and the disposition of their remains. These topics can be even more difficult to contemplate, let alone establish concrete plans for. However, planning for funerary arrangements can not only keep important decisions in your hands but also provide significant benefits to your surviving loved ones. If you are able, it is prudent to make such arrangements during your own lifetime.

What is an Irrevocable Life Insurance Trust?

An irrevocable life insurance trust (ILIT) is a commonly overlooked and underutilized tool for individuals to ensure that funds adequate to cover funerary expenses will be available to their loved ones. An ILIT is a trust, but one that is funded posthumously by the proceeds of a life insurance policy. Upon your death, benefits paid out by your life insurance company can be placed directly in this trust. Importantly, ILIT funds may not be subject to certain tax burdens or other liabilities.

The funds of an ILIT can be used, at the grantor’s instruction, to cover funerary expenses and those associated with the proper and desired disposition of human remains. Having an ILIT in place can aid your surviving loved ones in planning and covering the costs of a funeral service and burial or cremation. This specialized form of trust is also helpful in ensuring that your wishes regarding posthumous care are significantly more likely to be respected.

How Can Funeral Planning Help My Loved Ones?

The expenses associated with a funeral can be significant. It is not unusual for a funeral service alone to cost upwards of $10,000. People who have just lost a loved one are easily overburdened by the series of decisions and expenditures involved in planning a funeral. When no plan is left by the decedent, conflict may arise among survivors in the course of this planning. Disputes regarding the financing of a funeral can be damaging to a family during a time of grief.

Planning for your future funeral expenses and setting out how you would prefer that your remains are handled can save your loved ones significant stress and hardship in the immediate aftermath of your passing. It can also create a much stronger probability that your personal wishes will be carried out.

Contact a California Estate Planning Attorney

Law Office of David Schechet is committed to helping individuals plan out every aspect of their estate disposition, including funerary expenses. Our skilled Los Angeles estate planning lawyers will strive to design a plan that suits your unique needs and those of your surviving loved ones. Contact us at 800-282-4731 for a free consultation.

Source:

https://www.calcapmgt.com/resource-center/estate/a-primer-on-irrevocable-life-insurance-trusts