What are the benefits of preplanning and prepaying a funeral?
Preplanning and prepaying a funeral is a safe and secure way to plan for the eventual tomorrow. The knowledge that you took the time to take care of preplanning may be one of the kindest gifts you can give your loved ones.
Who can perform a funeral?
A person can preplan their own funeral. The family may also do it for a family member. The best way is to plan together.
What is my first step?
Contact your local funeral home for details on setting up a prearrangement. The funeral director will assist you in selecting both services and merchandise that meet your budget and satisfaction. There are two ways to prepay a funeral contract. The first method is to make payment in full for all services and merchandise you have selected. The second is to make a down payment and equal monthly payments towards the cost of the services selected until paid in full.
What happens to the money I paid the funeral director?
The money is deposited in the MFDA Master Escrow Plan, a subsidiary of the Michigan Funeral Directors Association which administers the Plan. The Association is located in Lansing, Michigan. You will receive a letter acknowledging the deposit of funds into the MFDA Master Escrow Plan. If you do not receive such a letter, notify the funeral director immediately.
What is MFDA Master Escrow Plan?
MFDA Master Escrow Plan is a master trust started by the Michigan Funeral Directors Association in July of 1987 for the use of the clients of its members. Michigan law requires that the funeral director place 100% of the prearranged funds in escrow. It is for this purpose that the MFDA Master Escrow Plan was established.
MFDA Master Escrow Plan funds are held and administered both by MFDA and Merrill Lynch Asset Management. Although all moneys are commingled to ensure the highest rate of return possible, each individual account is managed and reconciled on a separate basis.
What is the Michigan Funeral Directors Association?
In 1880 the Michigan Funeral Directors Association was created by funeral directors to serve both funeral directors and the general public. Since that time, MFDA has grown to include over 85% of the licensed funeral homes in Michigan.
The purpose of MFDA is to promote the objectives of mortuary science and the professional character and education of funeral service practitioners; educate and inform the public concerning funeral service; encourage just laws governing funeral service; provide group service benefits helpful to the business operation of our members; and maintain high professional ideals of public service among our members as we seek to meet community needs and the common interest of the profession.
What should be done when death occurs?
The family should call the funeral home at which the funeral was preplanned immediately. They are available 24 hours a day, 7 days a week. Even if death occurs away from the local area, the family should still call the funeral director back home. he will make the necessary professional contacts for you, including, if necessary, a funeral home in the location of the death. Although the funeral home will usually remember or know from their records, be sure to remind them that there is a prepaid funeral agreement.
Will more money have to be paid when the funeral is actually held?
If the contract is designated as a "guaranteed price agreement," it has been paid in full and there are no changes in the choice of services and merchandise, the answer is "no." If it is designated as a "non-guaranteed price agreement," the family will be responsible for any difference between the current charges at the time of the funeral for the goods and services selected and the amount in the escrow account. If you are not sure which kind of agreement you have purchased, ask the person with whom you set up the agreement.
What if I move away or change my mind?
The contract can be canceled at any time for any reason and, by law, you are entitled to receive a minimum of a 90% refund of both your original payment and accumulated interest in your escrow account. Just notify the funeral director and he will be happy to make different arrangements or give you a refund within 30 days. (NOTE: Some contracts may be certified "irrevocable" by the Department of Social Services in order to allow a person to become eligible for Medicaid assistance. Irrevocable contracts cannot be canceled for any reason, although it is normally possible to transfer performance of the contract to another funeral home.)
Who pays taxes on the income in the escrow account?
Under rulings of the U.S. Internal Revenue Service, the owner (normally the purchaser) of the contract has the tax responsibility. Accordingly, you will have been asked to sign an IRS W-9 form. You will be mailed a statement each January setting out the amount of money you need to add to your taxable income. normally the resulting amount of tax is very small.
What should I do if I have any questions or have a complaint?
Contact the funeral home with which you have the prearrangement. Normally they can handle any questions or problems you might have. In the rare instance that you do not receive satisfaction from your contact with the funeral home, you may contact the MFDA Master Escrow Plan at (517) 349-9565, but it is more convenient for everyone if you always contact the funeral home first.
Funerals
