There are two main advantages to arranging a funeral in advance: you get to decide what happens after you pass away, and you spare your loved ones from this difficult task.
Which contract for which service?
“Prearranged funeral services” include two types of contracts. Each type of contract covers what will happen after a person dies.
Funeral services contract
This contract lets you choose the services to be provided after you pass away, such as the ceremony, embalming or cremation. The contract can also include the purchase of goods, such as a coffin, urn or headstone. By making these decisions in advance, you know the arrangements will follow your final wishes. It also avoids having your loved ones make difficult decisions, which can lead to family conflicts.
This contract is for the purchase or maintenance of a sepulchre, that is, the place where your body or ashes will be kept. This could be a cemetery plot, columbarium or mausoleum, for example.
Does your contract follow the proper form?
To be valid, a funeral services contract and a sepulchre contract must include the following information:
- names and addresses of the funeral services company and its representative
- your name and address, and those of the person you have chosen to receive a copy of the contract
- the contract number, date and place of signature
- description of each item and service purchased, the price including taxes, and the methods and terms of payment
- how the money you paid will be managed between the time you sign the contract and the time you pass away
- rules for modifying or cancelling the contract
- a mention that the contract represents your wishes for your funeral and the treatment of your body
- a mention that the contract will be filed in the register for funeral pre-arrangements
The funeral services company must send you a copy of the contract within 10 days after you sign it, as well as a copy to the person you have chosen to receive a copy.
If a contract doesn’t contain this information, or if you don’t receive it on time and this causes you harm, you can ask a court to cancel the contract.
A registry for pre-arranged funeral contracts
In 2021, a new registry for funeral prearrangements and for prepurchased sepulture contracts was created. Before entering into any contract, a company offering funeral services must check this registry to see whether a contract dealing with the same person or services was already created.
Can you cancel your contract?
Even if your contract follows all the rules, you can still cancel it in some situations, depending on the type of contract. Also, penalties might apply based on where the contract was signed and when you decide to cancel it.
Contract signed at one of the company’s places of business
Funeral services contract: The company may charge a cancellation penalty. The maximum penalty is 10% of the value of the goods and services that have not been provided yet. For example, if you paid $10,000 for a funeral service and cremation, the maximum penalty is $1,000.
Sepulchre contract: A sepulchre contract can only be cancelled if the company agrees. Penalties may apply.
Contract signed elsewhere
Funeral services contract: If, for example, you signed the contract at your home with a representative of the funeral services company, you can cancel it without penalty within 30 days of receiving a copy of the contract. After that, the company can charge a cancellation fee of up to 10% of the value of the goods and services that have not been provided.
Sepulchre contract: The same rule applies if you change your mind within 30 days of receiving a copy of the contract. After that, you can only cancel if the company agrees. Once again, penalties might apply.
What happens to your money?
You’ve signed a contract for goods and services that will only be provided after you pass away, but you plan on living as long as possible, right? What happens to the money you paid to the funeral services company, and how is it protected?
After you pay, the company has 45 days to deposit 90% of this money into a trust account. Very strict rules apply to trust accounts. The company isn’t allowed to use this money for its own purposes, even in the case of bankruptcy. It can, however, keep any interest earned on this money.
Important! This only applies to money used to pay for goods and services to be provided after you pass away. If you pay for any goods and services that are provided right away, that money belongs to the company, and it can do whatever it wants with it.