How to plan for "Final Expenses" for an elderly parent?

Question

A number of years ago, my father purchased a pre-need funeral plan and cemetery plot for himself and my mother. As he is getting on in years, I am looking at what planning needs to be done so that when he passes I am not caught unprepared. In the process of doing so I discovered that the funeral home that sold his pre-need plan went bankrupt and the plan has no value.

When he purchased the plan, a friend talked him into cancelling his life insurance since all his final expenses were prepaid. (!) He is a widower so the funeral home has paid out for my mother. However, there is an added wrinkle in that he moved a couple thousand miles away to a different state and no longer wants to be buried in his plot. I don't know his finances but I don't think he has much in savings. I know he has no investments, just a pension and social security which allow him to live comfortably.

I am in a conundrum because while he has signed to plot over to me, I have no use for it and it seems like trying to sell a plot in a another state might be a lot of hassle and not produce much of a return. I learned that a modest funeral, plot and associated burial costs will run between $10,000 and $20,000. Cremation is cheaper but goes against his wishes. A direct burial would save money but is still more money that I currently have.

I checked out life insurance policies for an 80 year old male. A $20,000 policy is north of $200/month. While my income is relatively high, my budget is currently very tight and I'm currently I'm unable to set aside any money other than contributing to a modest 401k. I am an only child with no relatives available to help out. The law makes it clear that I would be held financially responsible for funeral arrangements - with an escape clause that if I am not "willing" (whatever that means) or financially able to cover the funeral arrangements, the state will cover it lien the estate, possibly after some kind of investigation and possibly in conflict with any wishes of the deceased.

None of the budgeting resources I have seen cover such unexpected expenses which are 5-10 times more than the typical expense quoted. If I could save $200/month it would still take over 8 years before I would have enough money and he could die in the interim. On the other hand, with a $200/month policy he might live another 20 years. Or I could simply do nothing and hope the state doesn't find a way to force me to pay anyway, causing me to default on my other responsibilities. Another option would be to go against his wishes with cremation (the cheapest possible option), saving over half the cost.

Is there any other option I haven't thought of?

Answer 1

I assume from your question that your father does not have any assets to liquidate in the sad event of his demise. You mentioned a cemetery plot he doesn't want used--that's an asset you should try to liquidate. Otherwise, any value from his estate would be suitable to pay funeral expenses. (You give a good reason not to buy pre-paid funerals.)

Some assets may not be apparent.

My mother died more than twenty years before my father. We were surprised to learn that she was the beneficiary of record on one of his accounts. That's how I paid for his funeral. (But first I had to scare up Mom's death certificate to present to the court.)

Lacking any such assets (you've asked him I presume), you have between now and his demise to adjust your budget and sacrifice part of your lifestyle to prepare for this inevitable expense. Yes, your budget is tight and no, you don't want to make that sacrifice. I'm sorry. Maybe you should ask your father what he would do if your roles were reversed.