● The Deceased Pays
● The Bereaved Pays
● Destitute Funerals
The last thing you want to think about when a loved one passes away is dealing with the costs of a funeral. In some situations, this is something that may have been planned and paid for already, but in many situations, it comes into play during an emotional time for family and friends. To know what to do in each situation we will cover the three options that come up when paying for a funeral:
The deceased already has plans and funds in place to cover the costs of their own funeral;
The bereaved, the family and friends overseeing the arrangements, can cover the costs of the deceased’s funeral; or
In the situation where nobody is able to cover the costs, the NSW State Government offers Destitute Funerals.
Please keep in mind that the information provided below is a summary only and your situation may be different. We strongly recommend doing more of your own research before agreeing to anything.
1. The Deceased Pays
If your loved one passes away with plans in place, they may have notified you when they were drawn up, or via their Will. Even if this hasn’t been done, they may have put funds in place for their death. Generally, when this is the case, a person has either paid money towards funeral insurance or a bonds investment, or they may have money in their bank account that can be accessed to cover the funeral costs.
A funeral bond is essentially an investment account that can only be used to cover the costs of your funeral. They are a good choice if you’re unsure of your funeral wishes, as you can start the savings without making all the planning decisions at once. The current funeral bond limit is $14,000 (as at 1 July 2022).
Funeral insurance works much like any other type of insurance, by making regular smaller payments to an insurer, who will then distribute the funds to your nominated person after you pass. Unlike funeral bonds, insurance will require regular payments and will lapse if a payment is missed. It is also important to note that funeral insurance can sometimes end up costing more than your funeral arrangements if not managed.
2. The Bereaved Pays
Death can be unexpected, or understandably a topic that has been avoided, in which case funeral arrangements may not be accounted for. This unfortunately leaves many people in the situation of having to cover the funeral expenses when someone they love passes away. Here are some options to assist with this if funeral funding is difficult to find.
Superannuation funds are a useful source when covering funeral costs. The deceased may have had a death benefit or other life insurance component. Similarly, you may find that you are able to access your own super early in order to cover funeral expenses of a family member. Every fund is different, and every person’s situation is different. The most important thing is to start the conversation early. By communicating early, you can determine who is the nominated beneficiary and the process for accessing the funds and avoid a lot of stress.
There are many organisations that provide both emotional and financial bereavement support. Centrelink is a good start and where applicable the Department of Veterans Affairs, or Aboriginal Land Council who will offer some form of funeral assistance. Other potential sources of funds include trade unions, local area health districts and of course any private insurers.
In today’s geographically dispersed, digitally connected world crowdfunding has become a lot more common and accepted so many people have turned to it to cover funeral costs. If done in the right way, crowdfunding provides a way for family members or friends to contribute to the funeral if they are unable to attend, or for community groups and acquaintances to pay their respects. Just be careful which platform you choose, taking note of administration costs, limited timeframes and other restrictions that may apply.
3. Destitute Funerals
In the circumstance that the deceased or bereaved are unable to cover any funeral costs, NSW Health administers what are referred to as destitute funerals. There are strict conditions in place to be eligible for a destitute funeral, and NSW has a preference for cremation. Similarly, they also offer assistance for families who find themselves in financial hardship after covering the costs of a funeral.
There is a lot to consider when preparing a funeral and it can be an emotional time. H.Parsons are experts in caring for you and your loved ones and we are committed to ensuring your service is personal, respectful and dignified. Make sure you talk to our team via our contact form, calling (02) 4228 9622 or visiting us at one of our locations.
Funeral costs are typically covered by the deceased, the bereaved or the State. Who pays for your funeral will impact the influence you have in your own send-off.