Should You Pre-pay Your Funeral?

Preparations for funeral expenses are not something everybody wishes to consider.  However there may be benefits in planning and paying for some aspects of your funeral.

Pre planning can eliminate the worry of paying for a funeral in future.  For many people this is not a concern.  However should you wish to explore pre planning the following should be considered.

Funeral Bonds

Funeral Bonds or Funeral Investment are managed investments that earn interest but have the following specific features-

• Interest must be added to the capital
• The capital and interest is only realised on death when it is paid to the estate or funeral director to cover funeral expenses
• Money is invested in an independently managed funeral fund
• Options of investing in lump sum or instalments
• Jointly owned bond can only fund one funeral.

Funeral Bonds can be an exempt asset providing they do not exceed the Funeral Bond Allowable Limit.  Funeral Bonds that are not exempt are treated as financial investments.  Therefore included in assessable assets and deemed to be earning income under the deeming rules.

If you have more than one funeral bond you can nominate which one you wish to be exempt.  You will need to calculate the greatest assessable value that can be exempt.

Pre Paid Funeral Expenses

Centrelink will not include any of the amounts that you prepay to a funeral director provided you have a contract that sets out the services to be undertaken where no more expenses need to be paid.

Burial Plots

A burial plot is not included in your assessable assets regardless of its value.