By Rick Bloom, Bloom Asset Management

I was reading an article the other day about a woman taken advantage of in regard to planning her husband’s funeral. It is not surprising that many Americans are taken advantage of when it comes to planning funerals.

Most people don’t plan their funerals, so it is left to their loved ones, who are very vulnerable at that time. Because so many people are being taken advantage of, it is important that more of us plan ahead and make decisions with clear minds. One benefit of pre-planning a funeral is the fact that it gives you an opportunity to be cost-sensitive. After the loss of a loved one, it is difficult for people to think dollars and cents; however, costs do matter.

If you are thinking about pre-planning your funeral, some issues that you need to consider are the type of funeral arrangements you desire, whether your remains will be buried or cremated, and if necessary, what type of casket you want. In regard to caskets, the market certainly has changed. In the past, you had to purchase a casket through a funeral home. However, that is no longer the case.

More than 20 years ago, the Federal Trade Commission issued a ruling that not only required funeral homes to itemize the costs of all services but also stated that you do not have to use funeral home caskets. If you choose to purchase a casket elsewhere, the funeral home must accept the casket you select. Caskets are a high-profit-margin item for funeral homes. It is not unusual for them to mark up the price of caskets 500 percent, 600 percent, even 700 percent. In today’s world, you can buy caskets online, and even retailers like Costco sell caskets.

Pre-planning is different from pre-paying. If you are thinking about pre-paying a funeral, there are some issues that you need to resolve. The first is: what happens if you are no longer living in the community? Can the money be transferred, or will it be refunded?

Some additional issues to consider are things such as what happens if the company goes out of business, exactly what are you paying for, and can you cancel the contract and get a refund? If you decide to pre-pay your funeral, you need to make sure that you do your homework in checking out the funeral home.

I know this is a subject that none of us likes to discuss; however, it is a fact of life—we are all going to die. As I have stated many times in the past, there is one reason and one reason only that we do estate planning: because we love our families. I think the same can be said with regards to pre-planning your funeral. The reality is that probably the worst time to think about a funeral is after you’ve lost a loved one. Pre-planning your funeral can be the ultimate act of love for your family.

Rick Bloom is a fee-only financial adviser. His website is www.bloomassetmanagement.com. You can hear him live on Sundays noon-3pm on the Detroit, Michigan radio station WDTK-AM1400.