Planning and paying for final funeral arrangements
As strange as it might feel to think about and even plan your own funeral, it’s a proactive and prudent thing to do. By planning ahead, you can save your family and friends from having to make tough decisions during an emotional time. And, more importantly, planning ahead for your final arrangements ensures that it won’t be a financial burden on your loved ones. But do remember that even with a plan in place, the person you name as executor in your will can make changes at the time of your death. It is important to discuss your plans with your executor and your loved ones.
There are different options available when planning final arrangements. With careful research you’ll be able to make the wise choice and get the peace of mind that comes from knowing your loved ones will have everything they need to fulfill your final wishes.
Pre-arranged funeral plans in New Brunswick
In New Brunswick, you can preplan and prepay for your final arrangements, such as a funeral or cremation, under the Pre-arranged Funeral Services Act. When you do, you enter into an agreement (contract) with a funeral provider. This contract is called a pre-arranged funeral plan. By purchasing a pre-arranged plan, you protect yourself and your family from increases in price over time for the services that you choose. As with any major purchase, it’s always a good idea to shop around to make sure you get the services you want for a fair price.
When you buy a pre-arranged funeral plan, the funeral provider must use a standard contract form provided to them by FCNB.
Although it would not make the contract invalid if the provided form is not used, it is a requirement. The funeral provider must provide you and your beneficiary with a copy of the plan (contract). You should always review and understand the contract and make sure that it lists all of the services and supplies you have chosen and, that the items listed meet your needs, and that each item or service you are buying is clearly stated.
The standard form makes sure that consumers are given all the important information about the transaction, such as the:
- name and date of birth of the person the plan was bought for (the beneficiary)
- name of the person who bought the plan (the purchaser)
- description of the goods and services to be included in the plan
- description of goods and services not included in the plan
- place where the funeral services are to be performed
- rights that you and the funeral provider (or their representatives) have if either of you decide to terminate, cancel or discontinue the plan, or fail to meet your obligations under the plan
- penalty when a plan is terminated or cancelled
- amount of money paid toward the plan
- distribution of interest earned on trust money
- date that the remaining balance is owing and/or payment schedule agreed to
If any additions to the minimum requirements are agreed upon they should be clearly indicated on the pre-arranged contract. A funeral provider can never alter any right or duty that is already stated under the Pre-arranged Funeral Act. If you want to make additions to the standard form, you should consider getting advice from a lawyer before entering into an additional agreement.
Note that the funeral provider may substitute merchandise if the merchandise agreed to under the plan is no longer available at the time of the death of the beneficiary, as long as the merchandise is of equivalent or greater value and is similar in style, design, colour, construction and quality.
You can pay for a pre-arranged funeral plan in either a lump sum payment or instalments.
- When you prepay, the funds are held in a trust account until the services are needed.
- The funeral provider is required to provide you with a receipt for each payment and deposit your money into a trust account within 10 working days.
- The funeral provider has 15 working days to provide you with proof the funds have been deposited in trust, in your name, at a financial institution.
The licensed funeral provider can terminate, cancel or discontinue the plan due to an unpaid balance. You should always ensure payments are up to date. Should this occur, trust monies are required to be refunded back to the purchaser (including interest).
Cancelling or transferring a pre-arranged funeral plan
The Pre-arranged Funeral Services Act has provisions that allow for the assignment (meaning transfer) of a pre-arranged funeral plan to another funeral provider in certain cases, as outlined below.
- A funeral provider may, with the consent of the purchaser or their legal representative, assign a pre-arranged funeral plan to another funeral provider
- The Director of Consumer Affairs may assign any pre-arranged funeral plans to another funeral provider when the original funeral provider is unable or unwilling to perform contracted services
- A licensed funeral provider who makes an assignment of a pre-arranged funeral plan to another licensed funeral provider on the request of the purchaser or the purchaser’s legal representative may charge an administrative fee that does not exceed $250, HST or its replacement tax included
- A purchaser or their legal representative may terminate, cancel, or discontinue a pre-arranged funeral plan within seven days after entering into the plan without penalty or charge. This is a cancellation right that cannot be contracted out of.
- A purchaser or their legal representative also has the right to terminate, cancel, or discontinue a pre-arranged funeral plan at any time after seven days subject to payment of a penalty not exceeding $250
- The parties to a plan are prohibited from agreeing to a higher penalty fee or charge and any agreement to pay more is void
To protect you and your money, FCNB requires that each funeral home (provider) and the funeral home’s manager be licensed. This means that:
- Each funeral provider must display proof of their licence in a prominent area within the business.
- Funeral providers and their employees must adhere to certain rules with respect to sales practices. They must not solicit at your residence or place of employment nor can they solicit via telephone.
The requirements for pre-arranged funerals apply only to contracts paid by funds deposited into a trust account. The rules do not apply to pre-arranged funeral plans purchased through contracts of insurance, or the purchase of services offered at a cemetery.
Instead of purchasing a pre-arranged funeral, some New Brunswickers choose to buy life insurance products to cover the cost of their final arrangements. In this case, your beneficiary receives a death benefit to purchase end-of-life goods and services when they are needed. Depending on how much coverage is purchased, your policy may cover the entire cost, or part of the cost, of final arrangement expenses. When trying to decide whether an insurance product is the best option for you, speak with a licensed insurance professional, shop around, and be sure to read the fine print and understand the product you are buying.
- Note that under the Pre-arranged Funeral Services Act, an insurance product (e.g. life insurance, pre-need insurance, final expense insurance or annuities) is not the same as a pre-arranged funeral plan, and the rights and protections available under the Act and regulations do not apply.
Eligibility: You must apply and be approved by an insurance company to purchase life insurance. For many life insurance products, applicants are required to complete a medical questionnaire and/or a medical exam. Once your application and medical exam have been reviewed, it will either be approved or denied. So the first thing to determine is what life insurance product(s) you are eligible to buy.
Waiting period: Some insurance products are guaranteed, meaning that no medical exam and/or questionnaire is needed to qualify for coverage. Often these types of insurance products have a two-year waiting period, where if the person dies within two years of buying the policy the death benefit will not be paid. It’s also important to know what happens to any premiums paid if the policy is not paid out at the time of death.
Coverage: To know how much coverage you need, you’ll need to know what you would like your final arrangements to be and the estimated cost. It’s always a good idea to shop around with funeral service providers to ensure you have a good understanding of the services and products you would like and the cost. Keep in mind that for some policies, if the purchaser dies too soon or doesn’t declare a pre-existing condition coverage may be denied by the insurance company.
Cancellation: Your right to cancel will depend on the terms of the insurance contract and those terms vary from company to company. Be sure to ask what your cancellation rights are under the policy and if there is a cancellation fee or penalty. Be sure to ask what happens to any premiums paid if you cancel the policy, and what will happen if you miss a payment and whether the policy can be cancelled by the insurance company.
Designating a beneficiary: A beneficiary is the person(s) named on the life insurance policy who will receive the death benefit when the life insured dies—often a spouse, child, or another close relative. If designating a trusted person as the beneficiary, it’s typically an option to leave a percentage of the death benefit for the purpose of paying for funeral services. Sometimes, a funeral provider will suggest making them the beneficiary so that the money from the policy goes to them directly. If you go this route, be sure to have safeguards in place so that any funds remaining after funeral services are paid will be returned to the family or estate.
Your specific funeral plans: Generally, when insurance products are purchased, a second and separate contract from the insurance policy must be signed with a licensed funeral provider to enter into an agreement that ensures the insurance money is used for the supplies and services you have chosen. An agreement of what funeral services will be provided and paid for by an insurance product is not covered by the Pre-arranged Funeral Services Act.
Only licensed life insurance agents can sell life insurance products. Some licensed funeral providers hold a life insurance agent licence and can sell you life insurance products. Either way, be sure to check whether the person selling you the product is licensed.