How to Pay for a Funeral from an Estate

One of the most often-cited ways to cover funeral costs is to make the estate of the deceased pay for it. An “estate,” in this situation, is the sum total of the belongings, properties, and financial accounts the deceased leaves behind. Ranging anywhere from a few thousand dollars to millions of dollars in assets, this money is what is later broken up and disbursed according to the deceased’s will.

Because this money belonged to the deceased, it is the ideal place to turn for funeral costs. However, this money is rarely open and available to be spent however you wish. If you would like to use the deceased’s estate to pay for a funeral, you will need to jump through a few hurdles first.

  • Find out if the estate has already made funeral arrangements. Estates include all financial accounts, possibly including life insurance, burial insurance, or prepaid funeral plans. If this is the case, the beneficiary of the policy or trust will be in charge of handling the arrangements.
  • Determine who the executor of the estate is. The executor of the estate is typically named in a will as the person in charge of disbursing the funds and handling the money (often overseen by a lawyer or even a court). In the absence of an estate executor, the task falls first to a surviving spouse, then to either the deceased’s parents or adult children. This individual will be in charge of all financial arrangements, including funeral ones.
  • Use a joint account to pay for the funeral. If your name is on a shared bank account with the deceased, you can access the money at any time. However, be sure to keep records and receipts of all funeral-related expenses for future reference. Payments made out of the estate are not taxed the same way as an inheritance.
  • Make the estate pay. In many cases, the deceased’s accounts can pay for the funeral directly. Instead of you writing a check or covering costs, you can assign a life insurance policy to the funeral home or have the bank cut a check to pay for the arrangements. This eliminates you as the middleman and draws directly from the estate instead. You may be able to ask the funeral home to file a claim against the estate or bill the estate directly to help this process along. (Estates are required to pay out funerals, lingering medical expenses, and estate attorney and court fees before the money is turned over as an inheritance.)
  • Pay for the funeral yourself and have the estate reimburse you. If the estate is in probate or otherwise contested and difficult to access, you may want to pay for the funeral yourself. You can then file a claim/expense with the estate. You should be reimbursed (tax free) before the estate is dissolved or otherwise paid out.

The larger and more complex the estate, the more hoops you will have to jump through to settle all the financial affairs. If you are wondering how to pay for the funeral, be sure and talk with the estate attorney or other financial advisor before you make any arrangements with the funeral home.

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