Carefully read funeral contracts

By Iris taylor

Published: January 4, 2009

A reader entered into two pre-need contracts with a Richmond funeral home, one each for her and her husband.

A pre-need contract is an agreement for funeral services paid before death.

The reader's husband died. But the funeral home, instead of honoring the amount she said they agreed upon in the pre-need contract, charged current prices when her husband died.

The reader, armed with a copy of Virginia's regulations, filed a complaint with the Virginia Department of Health Professions in Richmond, which regulates funeral homes.

She provided copies of the pre-need contract and the final contract in which she was charged current prices. The regulatory board, composed mostly of funeral directors, ruled against her, saying there was no apparent violation of state laws or regulations.

The reader said she was wronged. She is especially concerned because her own pre-need contract is with the same funeral home.

Does she have any recourse? As a consumer, how can you avoid winding up in the same predicament?

Understand what you are buying. Read the fine print very carefully, cautioned Virginia AARP spokesman Tony Hylton.

A contract can contain guaranteed items and non-guaranteed items.

Guaranteed prices should not increase. Non-guaranteed prices may have been written in when the contract was signed, but the prices charged at death reflect current funeral costs.

Always ask which items are guaranteed and which aren't.

Don't sign the contract until a third party looks it over. Consumers can take it home and review it with the family or a legal adviser before signing it, said Lisa Hahn, executive director of the Virginia Department of Health Professions' Board of Funeral Directors and Embalmers.

Know where your money will be kept. "It's important to know who is holding it," Hylton said. "Many people think it's safely held, then find it to be vanished. Get documentation of where it's being held."

It should not be held by the funeral company, but in some type of insurance policy, he said. "And you should have a copy of the policy so your heirs can look at it. If it's in a trust account, know who the trustee is, and have a copy of the trustee agreement."

Make your check out to the funding company, not the funeral home, and never pay with cash, Hahn said.

Consider not entering into a pre-need contract. These types of contracts are not a good idea, said Josh Slocum, executive director of the Funeral Consumers Alliance, a consumer advocacy group based in Vermont.

"There are a lot of things that cannot be price-guaranteed."

People prepay because they want to make it easier for survivors, he said. In many cases, though, pre-need contracts make things more difficult.

"Those contracts can be very complicated. Kids almost never understand what was paid for and not paid for" after a parent dies.

Open a Totten Trust instead. That's a payable-on-death account. You can open one at a bank or credit union, deposit your funeral-expense money and designate a beneficiary to carry out your wishes, Slocum said.

The account is in your name. You get the earned interest and don't lose anything if you change your funeral plans or move out of state.

. . .

Does the reader mentioned above have any recourse?

Yes, the Office of Consumer Affairs will try to help her, agency spokeswoman Marion Horsley said. "The whole thing will depend on what the contract says and the law says. Those two items are key to what Consumer Affairs can work out for her."

Virginians who pre-pay their funeral may be entitled to a 90 percent refund plus interest if they cancel their contract, Slocum said. There is no refund provision for pre-paid grave services, though, he said.
Contact Iris Taylor at (804) 649-6349 or .