Industry Related Links

June 28th 2010

Pre-paid Funerals

PRE-ARRANGED AND PRE-PAID FUNERAL PLANS

Plan what you want

Thinking about your own funeral can be quite a difficult concept to consider. But your funeral director can help you to plan ahead so that your grieving family aren't further burdened during this stressful time.

Why pay now?

Pre-paying your funeral service expenses helps to relieve your family of the financial burden. And pre-paid funerals up to $10,000 are currently excluded from asset testing (under current government policy) when assessing eligility for a subsidy for long-term residential care for the elderly.

THE BENEFITS OF A PRE-ARRANGED FUNERAL

Peace of mind

A pre-arranged funeral will give you and your family the peace of mind of knowing that your wishes are understood, your funeral details are in good hands and the financial burden has been addressed.

Security of funds

The money that you pay now for your pre-arranged funeral is held in Trust for you and will be released at the time of your death to go towards covering the associated costs of your funeral.

You decide

Your arrangements are personal to you - in conjunction with your funeral director and your family, you decide what you want.

Protect your family

Your family and loved ones are relieved of the responsibility of making difficult decisions in very emotional circumstances.

Financial benefit

Up to $10,000 in a pre-paid funeral plan is excluded from asset testing (under current government policy) when assessing eligibility for a subsidy for long term residential care for the elderly.

HOW PRE-PAID FUNERAL TRUSTS WORK

How do I join?

A pre-paid funeral plan must be a funeral paid for in advance, not an investment vehicle. This means that there must be an funeral arrangement component. You cannot simply pay money into the trust and arrange a funeral later. Some form of pre-arrangement is paramount to ensure you comply with the "Financial Advisers Act". Your funeral director can meet with you and your family to discuss your options in more detail.

Who can join?

Anyone can join a pre-paid funeral trust regardless of their age or state of health.

Can I arrange a Plan for someone else?

Yes. It is common to pre-arrange a funeral for a family member or loved one. Confidentiality is assured - all correspondence will be sent to the person arranging the plan.

How much money will I have to pay?

The amount is entirely up to you. Every funeral is different and the cost of your funeral will depend on what you pre-arrange. Your funeral director will help you tailor a funeral service to suit your personal needs and budget.

Funds paid into a pre-paid funeral trust are held until the death of the participant and then are paid out to go toward the associated cost of their funeral. If the funds held in the pre-paid funeral trust exceed the funeral expenses then any remaining money is refunded to the estate. If the funds are less than the funeral expenses then the family is required to meet the remainder costs.

Do I have to pay into the trust in one payment?

No. Most people do pre-pay their funeral in one single payment but you do not have to. You are able to make payments in installments if that suits you better (further costs may apply).

Are the costs of the funeral inflation proofed?

No. However, any interest that is allocated to your pre-payment may help to offset any increases in the cost of your funeral as a result of inflation.

WHERE DOES MY MONEY GO?

If you are interested in a pre-paid funeral plan then there are three providers available to you and your family. All the providers have pre-paid funeral trusts where funds are deposited for the use of paying for funeral expenses and are not to be considered an investment vehicle.

• Canterbury Christian Funeral Trust Limited (CCF Trust) - funds held in a trust account with The Bank of New Zealand Limited.

• Funeral Directors' Association of New Zealand Funeral Trust (FDANZ Funeral Trust) - funds also held in a trust account with Westpac New Zealand Limited.

• Third Party Funeral Trusts - for example provided by Public Trust

The trustees of both CCF Trust and FDANZ Funeral Trust hold your funds in trust for you until it is needed. These funds held do earn a low rate of interest which the trustees allocate to your funds. The trust funds incur a low rate of interest as the funds are deposited in conservative investments at the banks discretion and will be taxed at source (RWT).

What are the fees?

CCF Trust Ltd has an initial one off administration fee for all funds deposited in their trust. Administration fee: $300.00 There are no other associated fees.

FDANZ Funeral Trust has an initial Entry fee: $100.00, Administration fee: $3.50 per month, Instalment fee: $15.00 per instalment (for non automated payments, no fee for automatic payment intalments).

Peace of mind for you.

Peace of mind for your family.

Financial peace of mind for both.

Should you have any further questions, or wish to discuss the pre-payment options in more detail, please feel free to contact your funeral director.