According to some sources, the cost of a funeral is one of the three or four most expensive consumer purchases. Funerals can cost upwards of $12000.

They definitely don’t have to be so expensive, and there’s no reason (other than stubborn sentimentalism) to believe that paying so much for a funeral is somehow a sign of love for the departed.

Thinking ahead about your funeral is not something very many people do, and even less think about how they are going to pay for it.

Who pays for it?

Many people do not realise that if their Estate does not have enough money to pay for their liabilities, then the person who orders the funeral (and burial or cremation) is personally liable for the funeral expenses.

If the funeral was arranged by the deceased’s personal representatives (those named in the Will as the executors, or those who would be entitled to apply for letters of administration if there is no Will) then the costs of the funeral are a first call on the Estate. If the funeral was ordered by someone other than the deceased’s personal representative, then that person may recover costs from the Estate only if there are sufficient assets in the Estate to do so.

What does this mean? Provided there are sufficient funds in an Estate, the funeral costs would be able to be covered, but if there are not sufficient funds then the person who arranged the funeral may find themselves having to pay for the funeral personally.

The most important thing is to plan a funeral that is affordable to the Estate. If you are planning a loved one’s funeral, then try and establish whether there are sufficient funds to be able to pay for it. If there is not much money then plan your funeral accordingly. There are a variety of choices that can be made for funerals. Your funeral director will be able to give you many options to help keep the price down and realistic.

Funeral Grants

Grants are available from WINZ for funerals. However, the maximum Funeral Grant that can be paid to meet funeral expenses is $1,925.34 (as at 1 April 2011) and this grant is subject to an asset test.

According to the Funeral Directors Association of New Zealand, the average cost of a funeral is $8,800.00; this includes funeral director’s costs, coffin, embalming and local council fees.

It is, sadly, increasingly more common for a deceased person to leave a legacy of debts. There are some options though to make life easier:

Prepaid funerals

Prepay for your funeral. This can be as simple as having a separate account at the bank to pay for your funeral, or actually having the funds lodged with a funeral home or solicitor.

Pay for an insurance policy that will cover the cost of the funeral and make payment of the policy soon after your death.

Plan ahead. Provide clear and adequate instructions for your funeral arrangements. That way there’s no doubt about what you want.

If you are planning a funeral then make sure that you know exactly what’s included in the quoted price. Some funeral directors advertise low-cost funerals, but then charge separately for extras. Others charge a higher professional fee, but include more services. Be firm and sensible. Make sure that you and the deceased person are getting what you want, and don’t get sold into unwanted expensive extras.