Paying for a funeral

Arranging any funeral can be a major expense, even if you try to keep costs to a minimum. Given that a funeral of some kind will be necessary eventually, it makes sense to plan for this cost well in advance.

Here you can get a rough idea of what kinds of funeral arrangements are available, how much they might cost, and how you can source the money to pay for the send-off that your loved one deserves.

What will this funeral be like?

Remember that no two funerals are identical. Your loved one is unique, so their funeral will be too. If you are using a funeral director, you’ll have an initial meeting at which you set out your wishes: e.g. whether your loved one is to be buried or cremated, the kind of coffin, the number of cars, the music and a host of other decisions and details. It’s therefore a good idea to work out most of these details while your loved one is alive (they will probably have their own preferences), as this may well be a stressful time.

Everyone wants to give their loved one a special funeral. Bear in mind however that the decisions you make will affect the cost – and remember that paying your respects doesn’t mean you have to pay a fortune.

How much does a funeral cost?

Basic funeral costs are made up of the funeral director’s fees, third-party costs and local authority fees.

The average cost1 of a cremation in the UK is currently £3,300 while the average burial is £4,500. However, costs vary significantly from region to region, and some funeral directors may charge more than others. In some parts of the country (particularly London) average costs may be over £5,000, but in some places you would pay nearer £3,000. Similarly, funeral director fees even within the same area can vary by as much as £2,000 for similar services, so it is worth shopping around.

The cost of burial plots can also vary a great deal, depending on factors such as position and whether the deceased was a local resident.

Here’s a breakdown of typical funeral costs2.

Average funeral costs in the UK

Funeral director fees

 

£2,491

Plus either:

 

Cremation:

 £733

 

or Burial:

 £2059

Doctor’s and Minister’s fees

£316

The costs listed here generally cover only a basic ceremony and funeral director services. In most cases you will have additional costs such as stationery (invitations, order of service etc), flowers, catering for the wake and so forth. Headstones, memorials and other masonry will also be extra, and again the price can vary a lot.

According to the Sun Life Cost of Dying report 2017, funeral costs are rising by an average of 5 per cent per year.

Ways to pay for a funeral

It’s good to work out in advance how any funeral will be paid for.

First talk to a number of local funeral directors to obtain price quotes for the kind of services you’re after. It’s much easier to do this kind of shopping around before the person has died, as you have more time to think and reflect on your choices.

When you have some quotes, think about your payment options. If you are planning your own funeral, there are several ways you can ensure the costs will be met without placing a burden on your family.

Savings transferred to a relative

The simplest solution may be to set aside a portion of your savings to cover the cost. This money will need to be gifted to the person who is to pay for the funeral (otherwise it will form part of your estate and won’t be readily available). You can gift up to £3,000 a year without risk of inheritance tax, so two years should be enough to set up a fund that could pay for most funerals.

The downside is that funeral costs may have risen by the time you actually die. Also, you will need to be sure that they won’t spend the money on anything else in the meantime.

Life insurance and a trust

For a more reliable method, you could take out a whole-of-life insurance policy that will pay out enough money to cover the funeral expenses. This should be set up to pay into a trust, in the name of the person who will pay for the funeral, so that the money is available quickly and not subject to inheritance tax. You will need a solicitor to do this for you.

Make provisions in your will

You can ensure your funeral costs will be covered by your estate, by stating this in your will. However, it can take up to a year for assets to be released (the probate process), so usually someone will have to pay for the funeral themselves and be reimbursed later. This may cause temporary financial difficulties, so discuss this with whoever is likely to pay for the funeral.

If your relatives are unable to cover the costs at the time of the funeral, there are some legal services that will forward the money and recover it (plus their fee) from the estate later on. However this isn’t an ideal solution, so it’s worth considering one of the alternatives offered here.

Take out a funeral plan

A funeral plan lets you pay for your funeral directly in advance, usually in a series of instalments. The advantage of doing this is being able to pay at today’s prices (since funeral costs rise every year), as well as spreading the cost.

However, a funeral plan is still not necessarily the best value option for you. Paying in instalments may mean paying a higher price overall, especially if you have a long payment period. Also, a funeral plan generally will not cover some key elements, such as a burial plot, memorials, flowers and catering. This may give you false reassurance that the funeral is completely paid for, when it is not.

In many cases you may be able to achieve better value outside of a funeral plan, so ask your financial adviser about the best way to cover funeral costs.


1 2015 National Funeral Cost Index Report, Royal London

2 Sun Life Cost of Dying report, 2017

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