What happens when you die? Who pays? What can you do to ensure your whānau isn’t left scrambling to find thousands of dollars?
This is a question I fielded recently, and realised that there and then on my bicycle I couldn’t immediately recall the answer. How does a whānau withno ready cash pay for a funeral that can cost $10,000?
Funerals are expensive. Even just being cremated can cost a few thousand dollars without the fancy ceremony and obligatory tea, sandwiches and livestreaming.
Cremation alone costs from $2000 in most cases. For a full-blown funeral there’s the casket, professional service fee for the funeral director, mortuary fee, transfer fees, storage, hearse fee, doctor’s fee, medical referee fee, death certificate, death notices, photography/videography/livestreaming at the funeral, and celebrant or clergy cost.
Not everyone has a family that can come up with 10 grand to pay the funeral director at the drop of a hat. And as you’d imagine, funeral directors don’t necessarily want to wait months to be paid. Delays at the High Court mean probate can take four months currently. Probate is needed before an estate can pay out if the deceased has more than $15,000 in assets/life insurance to their name.
Funeral Directors Association of New Zealand (FDANZ) chief executive Gillian Boyes says funeral director’s terms and conditions vary, but typically payment is required within six weeks, or interest may be added to the bill. Most funeral directors are very understanding, she says. It can still be a trying time for those left behind.
Boyes says she expects the majority of funerals are paid directly out of loved one’s pockets.
“New Zealanders are not very good at preparing themselves,” she says.
The most common options for whānau that can’t pay for cremation or a funeral from their own pockets include:
The bank
It is possible to have the funeral paid out of the deceased’s account prior to probate. The BNZ, for example, says it will consider this on a case-by-case basis. Westpac’s website says it will be “very likely be able to release funds”, and the ANZ says it needs a funeral invoice and a completed funeral expenses claim form. Just beware that dealing with banks with anything other than day-to-day ordinary banking can be very trying.
Work and income, ACC or Veterans’ Affairs NZ
These organisations may contribute to the cost of a funeral. Subject to income and asset tests, Work & Income, for example, will pay up to $2445.37 towards a funeral. If the person dies from an accident or injury, ACC can pay a grant of up to $7024.80 towards the funeral and memorial costs.
Funeral cover
Anyone who watches television will have seen the endless adverts for funeral insurance. It’s good business for insurance companies. And it does do the trick. The insurance company will pay the funeral home directly. I did a quick search on one of the leading funeral insurance company’s website. A 60-year-old woman, who wanted $10,000 of cover, would pay $24.46 fortnightly. According to Statistics New Zealand, a 60-year-old woman would live to 88 years on average. By then, if she survived that long, she would have paid $17,806.88 in premiums for the $10,000 payout.
The right life insurance policy will cover you in the event of your death. Photo / 123RF
Life insurance
If you have life insurance, you shouldn’t need funeral cover. Life insurers typically pay the funeral home directly once they receive written notification of your death. Expect quite a bit of paperwork, however.
Pre-paid funerals/funeral trusts
Some people like to prepay with the funeral home. If the funeral director is a member of the Funeral Directors Association of New Zealand, that money goes into a trust run by the organisation. Boyes says the trust isn’t an investment. However, it’s run in a way that aims to grow your deposit over time to keep pace with inflation. That means if you’ve deposited $10,000 you will most likely get more than that back to pay for the funeral. And unlike funeral insurance, if there is any money left over, it will be paid back into your estate.
While researching this article I came across a very useful document on the FDANZ website for planning your own funeral. It also encourages people to gather together information that will help your executor take the steps to tie up your estate and contact relevant people and organisations. The PDF can be found here: Tinyurl.com/MyLifeMyFuneral
