We’re Here to Help
We want to help our Milwaukee neighbors with all of their questions, including those financial in nature. Here, we address benefits, details, and legal issues related to prefunding a funeral.
Title XIX (Nineteen):
1965 federal law that provides for medical assistance to those who cannot afford to pay for it.
- Funds sheltered: Savings and some insurance policies must be cashed in to qualify for Title XIX. 100% of funeral insurance prefunding can be sheltered.
- No limits: Through funeral insurance prefunding, there are no limits on how much you allocate for “Professional Services,” “Merchandise,” or “Miscellaneous” funds.
Prefunding Governed by the State
Wisconsin’s Funeral Preplanning Legislation (Act 295, effective in 1995) is one of the most consumer protective preplanning regulations in the United States.
- Funds are placed into a separate account. Prefunding a funeral is not a way for a Wisconsin funeral home to receive money early. A funeral home cannot access any money until a death has occurred, the family has contracted with a funeral home, and services and merchandise are provided.
- Funds are completely transferable. In the state of Wisconsin, you may transfer those funds anywhere, no matter the reason. They are in your name, not the funeral home’s name.
- Funds are sheltered from Title XIX.
- A preplanning specialist must be licensed. Not only must he or she be licensed by the state of Wisconsin, but in order to offer both funding options available in Wisconsin, he or she must hold an Insurance Intermediary License and be contracted to a specific funeral home.
Two Options: Bank or Insurance Funding
For those funeral homes that offer both, bank funding is rarely used because of the many insurance funding benefits.
- Interest is taxable.
- Costs may exceed Title XIX limits (if applicable), and there is no guarantee. Excess funds belong to the funeral home.
- Cost is paid when trust is opened.
- There are limits for Title XIX.
- Non-taxable growth.
- All funeral home costs can be guaranteed. Excess funds belong to the family.
- Payment plans available with possible first day coverage.
- No limits for Title XIX.
Preneed Insurance Documentation
- Must be purchased through a funeral home.
- Should have a contract detailing specific manufacturer/product name merchandise selected and how services will be carried out so that any family member can clearly understand it.
Funeral Cost Breakdown
- Professional Services (transfer and care of deceased, hosting and coordinating visitation and services, etc.)
- Merchandise (casket, burial vault, urn, etc.)
- Miscellaneous (nothing to do with the funeral home: open/close grave, clergy, newspaper, luncheon, flowers, etc. which can represent a large portion of funeral costs)
Not All Prefunding Is the Same
Another important factor is whether guarantees are offered and how they are implemented. Krause Funeral Homes has two guarantees; many funeral homes do not offer any.
Krause Funeral Homes Prefunding Insurance Guarantee
When you prefund a funeral, you and your certified preplanner will put the details of your wishes in writing—including specific services and manufacturer and model of the merchandise you choose.
At the time of death, we will compare that detailed list with a current price list to gather current costs. If at the time of death the cost of services and merchandise chosen is MORE than the value of the policy, the funeral home will cover the difference. In that way, you are guaranteed the service and merchandise you originally chose at no additional cost to you.
If after comparing the current costs with the value of the policy, the total is LESS than what is in the policy, the excess money goes to the family. If the deceased is under Title XIX, the family may use those funds for funeral related expenses (video tribute, luncheon, flowers, etc.); however, if not used, that money must be returned to the state as required by the Estate Recovery Program. If the deceased is not under Title XIX the extra money is returned to the family.
We cannot guarantee “Miscellaneous” fees, as they have nothing to do with the funeral home. For example, we have no control over the increase in costs or the amount the family may want to spend for newspaper death notices, flowers, or the cost of the luncheon or cemetery plot.
The Krause Service Guarantee
If you are not completely satisfied with any of our professional services or facilities, you will not be charged for that service.
The American Association of Retired Persons’ publications often touts the importance of preplanning: “Advanced funeral planning gives you the peace of mind that comes with knowing your funeral arrangements are taken care of while lessening the burden on your survivors.”
It also counsels consumers to be careful about prefunding. AARP advises people nationwide and there are many states around the country that have little or no consumer protection in place. In some states, a funeral home receives 30 percent of the funds upfront. In other states, the policy is not at all portable—if a consumer moves or changes his/her mind, stiff penalties or forfeiture are the only options. In Wisconsin, the funeral home receives no money upfront and the policy is completely portable.