Cemetery Arrangements

Cemetery Arrangements

In-ground burials, the traditional final disposition for Western funerals, remain the most common practice for older adults. But an increasing number of seniors are selecting cremations, which increases the choice of alternatives to in-ground burials, such as columbariums, scattering of cremains, and keeping cremains at home. (Cremains can also be buried in a cemetery).

Prepurchasing cemetery gods is a common practice with older adults. Some 18 million older adults (one-fourth of people ages 50 and above) have already prepaid their burial plots, mausoleum crypts, or niches in a columbarium, according to a 1998 AARP survey (AARP, 1998).

Increasingly, the two sides of the death care industry are merging (General Accounting Office, 1999). Funeral homes now sell headstones, urns, and other cemetery goods, while cemeteries sell caskets and vaults. The number of combination funeral home-cemetery operations is also increasing, although some state laws prohibit such operations. In the main, however, funeral homes and cemeteries are related but separate businesses, operating under separate statutes and rules. For example, the FTC Funeral Rule requires funeral directors to disclose prices and prohibits certain unfair and deceptive practices. Cemetery sales are not covered by that rule. Price lists may or may not be available from a cemetery, and there is no requirement that cemeteries provide price information over the phone.

While there are many private cemeteries, seniors may also have the choice of a burial in a religious cemetery. The Roman Catholic Church, for example, has thousands of church-related cemeteries in the United States (Norrgard & DeMars, 1992). There are also municipal cemeteries in some areas, and if the deceased was a veteran, the countrywide system of nation cemeteries may also be an option.

Purchasing a burial plot is like buying real estate. The purchaser receives a right-of-burial document (like a deed), and the plot can be bought and sold. However, some cemeteries may impose restrictions the transfer of rights of burial.

Cemetery Price List

Item Cost
Burial Plot (crypt or niche)                                                                             
Endowment or Prepetual Care                                                                            
Administrative Fees                                                                            
Outer Burial Container                                                                            
Opening and Closing the Grave                                                                            
Flat Marker                                                                            
Monument/Headstone                                                                            
Placement of Marker or Headstone                                                                                  
Urn for Cremated Remains                                                                            
TOTAL                                                                            

Cemetery Lots, Crypts, and Niches

There is a wide range of prices for burial plots. Prices vary not only from cemetery to cemetery but within the same facility depending upon the plot’s location. It is best to research and visit several cemeteries to view the facilities and available plots. Both casket and urn burial plots (for cremated remains) are available, with the cost of the latter being lower. Some cemeteries offer tandem plots where husbands and wives are buried in the same site.

Because of lawn maintenance costs, many cemeteries are creating sections where only flat markers are permitted. These are called garden plots and should costs less than a burial is that allows above-ground headstones or monuments.

Depending upon the cemetery’s location and ownership (private, municipal, religious) and the nature and location of the in-ground burial plot, prices could range from $400 to $3,000.

A crypt in a mausoleum (a building housing many crypts) or a lawn crypt (a below-ground mausoleum) is a more expensive than a burial plot because it involves masonry construction. A single crypt may sell for as much as $5,000 to $8,000. Tandem crypts for a couples may cost as much as $10,000. Eye-level crypts are more expensive than floor- or ceiling-level sites. An outer burial container is not required with a crypt, which could offset the crypt’s higher purchase price.

Increasingly, cemeteries are offering above-ground niches in columbariums for cremated remains. Such sites are less expensive than burial plots. Churches are also building columbariums within their facilities and selling niches to members. The cost of a niche in either location can range from $900to $2,500.

Endowment of Perpetual Care

States and municipalities are faced with the problem of what to do with abandoned cemeteries, where the grass is never cut, the weeds predominate, and headstones deteriorate. Either these facilities did not set aside adequate funds for perpetual care or their resources were improperly used. To ensure perpetual care, state laws and cemetery practices require setting aside a percentage of each burial plot’s purchase price in an investment fund, with the earnings to be used for maintenance.

Cemeteries may wrap perpetual care into the purchase price of a burial plot or add a percentage amount as a separate cost. Seniors should carefully scrutinize the level of care provided by a cemetery and ask about these charges when purchasing a burial plot.

Outer Burial Containers

Both cemeterians and funeral directors sell outer burial containers. Consumers need to know that cemeteries usually require outer burial containers for an in-ground burial with an urn. However, the cost of an urn vault is less than a casket vault. Seniors may even purchase urn vaults, which serve the dual function of being both an urn and a vault.

Opening and Closing

Whether the burial plot is prepaid or purchased at the time of the funeral, there may be an additional charge for opening and closing the grave at the cemetery. Similarly, although less expensive, there is a charge for entombment in a crypt or a niche. Saturday charges are higher than weekday rates, and most cemeteries will not schedule funerals on Sundays and certain holidays. Opening and closing costs may range from $150 for urns to $800 for caskets. Consumers need to be aware that some cemetery rules prohibit prepaying for opening and closing costs. This means some survivors may think that the deceased had it all paid for, and then realize they need to pay $850 before the grave will be dug.

Flat Markers

Flat markers to honor the deceased are made of bronze or granite and fit level with the ground, for ease of maintenance (lawn mowing). Costs can range from $150 to $300.

Monuments or Headstones

Monuments or headstones are installed above ground and come in a variety of sizes and shapes. These cost $1,000 or more because they are larger than a flat marker and are often made form more expensive stone. Seniors may purchase a monument from the funeral home, cemetery, or third-party monument dealers. The monument seller usually arranges or engraving the deceased’s name and personal details.

Placement of Markers or Headstones

Cemeteries and monument dealers charge seniors and additional fee to install headstone monument, or marker. This covers the cost of the equipment and supplies to fit the item. Costs range from $200 to $500.

Urns for Cremated Remains

Urns to hold the cremated remains of the deceased are buried in the ground, placed in niches, or saved by a survivor in some other location. Cemeteries, funeral homes, and crematories all sell these products. Like caskets, there are many styles and models available n showrooms and on the Internet as well as urns handmade by artists. Costs vary from $100 to $1000.

The Bottom Line

As with funeral costs, seniors must compare cemetery costs by looking to the bottom line for the same or similar groupings of goods and services from different sellers. Individual prices for the same or similar items vary from cemetery to cemetery.

Paying for Funeral or Cemetery Goods and Services

For an at-need arrangement, survivors should total the costs of both funeral and cemetery goods and services and determine how to pay the amount, if no prior payments were made. Prearrangers also need to consider today’s prices and estimate future increases. According to the Census Bureau, a 65-year-old today can expect to live an additional 18 years on average, and during that time funeral and cemetery costs will increase.

It’s difficult to predict what future costs will be, but one yardstick is a review of past increases. Historically, funeral prices have risen at a rate of 4 to 6 percent a year, but during the 1990s, inflationary increases exceeded the Consumer Price Index (General Accounting Office, 1999). Even with annual increases of only 5 percent, today’s $10,000 funeral and burial in the Western traditional will cost almost $25,000 in 18 years.

Should you pay $10,000 today or $25,000 in 18 years? Funeral arrangers and prearrangers should consider:

  • Reducing the bottom line (for example, will a 20-gauge meal casket serve as well as an 18-gauge? Could a cremation with no burial be acceptable? Does another funeral home have lower prices?)
  • Reviewing the individual’s eligibility for any death benefits
  • Reviewing existing assets, including life insurance policies, savings, and investments, to determine if a funeral and burial can be paid from existing benefits and assets
  • Determine whether existing assets and benefits are inadequate (forcing planners to adjust the level of gods and services downward or find alternative sources of funds, such as contribution form the family or loans).

Preneed Arrangements

Seniors can also prearrange a funeral or burial and pay in advance through a personal trust account, a state regulated trust, or a funeral insurance policy. For prearrangers, the advantage to prepaying is that the family’s burdens at the time of death are eased, since these details are already settled. With a number of plans, seniors can also lock in a price for delivery at some point in the future.

Personal Trust Accounts

Personal accounts can take two forms:

  •   A payable on death (POD) account requires a consumer to open a savings account with a funeral director or cemeterian as the recipient, payable on death. Seniors might also consider making the POD account payable to a family member or friend, rather than the funeral director, in case they die while on vacation, or the funeral goes out of business. (This is not available in all states.
  • A Totten Trust is a simple agreement that makes the funeral director or cemeterian the beneficiary of a trust. During his or her lifetime, the consumer is the owner, controls the account, and pays taxes on any earnings. At the time of death, the principal and earnings are paid to the funeral home or the cemetery. If the funds are insufficient, survivors need to supplement the trust account. If there is a surplus, that amount is disbursed among the heirs. Such trusts provide the consumer with maximum control, while setting aside funds for end-of-life expenses.

State-Regulated Trusts

Laws in many states (AARP, 1999a) have established a plan whereby a senior pays a specific amount today for the delivery of an itemized list of funeral or burial goods and services at some point in the future. Some states’ requirements differ for funeral homes and cemeteries, while some states do not even regulate preneed cemetery sales.

For example, Charles Sommerfield decided to pay $7,500 in advance for his funeral. He visited Andrew’s Funeral Home, selected the elements he wanted for his funeral, signed an agreement for future delivery, and paid the amount in full. State law where Sommerfield lives requires funeral directors to deposit 100 percent of the prepaid funds in an account held in trust until the time of need. Every year the state funeral board audits the funeral director’s books to make sure trust funds are where they are supposed to be.

Sommerfield also signed a contract for future delivery and prepaid $2,000 to a local cemetery for a vault, opening and closing of the grave, and a marker. (He already held title to a burial plot). With this purchase, the cemeterian, unlike the funeral director, was required to trust only $1,000. (Trust requirements are different for cemeteries and funeral homes in Sommerfield’s state.) The other $1,000 remained with the cemetery, but regardless of how it handles that money, it must provide the burial goods and services at the time of need.

Upon Sommerfield’s death, the funeral director withdrew the trust funds to pay for the funeral as itemized in the contract. There was no money leftover, but if there were, the funds would have been returned to the family or remained with the funeral home, depending on the contract.

Such trusts can be made irrevocable, a requirement for Medicaid and SSI eligibility, but even though consumers may never realize any income, they may be responsible for taxes on the earnings unless they purchased a nontax plan.

Insurance-Funded Plans

A prepaid insurance plan regulates a consumer’s funds by placing the prepayment in an insurance policy, with the intent of using the policy’s payout at death to cover funeral and cemetery costs. The following is an example of a pre-funded insurance plan.

Edith Helgerson agreed to pay $7,000 in advance for her funeral, but instead of placing these funds in a state-regulated trust account, the funeral director, acting as an insurance agent, sold her a life insurance policy. Helgerson selected the goods and services she wanted, signed a contract for delivery at some point in the future, and purchased an insurance policy with a face amount equal to the funeral cost. The beneficiary of the insurance policy is the funeral home, although Helgerson could appoint a different person at any time, which would void the funeral contract. She paid a single lump-sum premium, although multiple payments (five- or ten-payment plans) were available.

Some insurance companies offer guaranteed-issue policies, meaning that no health questions are asked. However, guaranteed-issue policies can limit the death benefit to the premiums paid for the first few years. Other policies have limited underwriting, and health conditions determine eligibility. If the insurance company determines the consumer to be ineligible for a life insurance, an annuity may substitute.

For seniors, the benefit of an insurance-funded product is immediate coverage (unless the policy is guaranteed issue), even if they die before paying all the premiums. With most plans, the sellers offer a price guarantee, and there is no federal or state income tax liability on policy earnings. The principal disadvantage is the historically lower earnings of life insurance policies.

Final Expense Life Insurance

While it is not preneed product, because no goods and services are tied to these policies, life insurance sales to older persons have become big business. These are small policies, $10,000 or less, marketed on television, in newspaper and magazine ads, through the mails. Final expense life insurance is sold primarily by insurance professionals. It is also sold by the death services industry. The policies’ death benefits are used to pay for the costs of a funeral or burial.

Because their risk of death is higher, life insurance for older people is expensive. People 73 and older pay more in annual premiums than the benefits to be paid out, unless they die within a few years of first purchasing one of these policies.

In Washington state, one 74-year-old consumer complained to the insurance commissioner that he paid more than 2,500 in premiums over time by was eligible for only $1,144 in benefits (Norrgard & DeMars). To combat this problem, the Washington state insurance commissioner issued a regulation banning the sale of small, multiple-payment life insurance policies where death benefits are less than premiums paid plus interest (Norrgard & DeMars, 1992). A few other states have taken similar steps, but the abuses continue.

Problems with Preneed

According to an AARP survey conducted in 1998 (the most recent figures available), 40 percent of the adult population age 50 and older had been solicited for a preneed funeral or cemetery purchase. Industry marketing seems to work because approximately one-third of this population prepaid or was in the process of prepaying for a funeral or a burial at that time. Of these, 86 percent had purchased a cemetery plot, crypt, or niche, and 40 percent had prepaid a funeral. Although its products are evolving, preneed continues to be a major segment of the death services industry, with assets in the billions of dollars (General Accounting Office, 1999).

Should a consumer prepay? Both AARP and the Funeral Consumer Alliance caution seniors about this purchase. Other advocates flatly say no. This purchase is unlike any other in that:

  •   Seniors surrender independent control of their funds.
  • The length of time between signing and fulfillment may be years away, and any mishandling of funds may not be discovered until much later.
  • The individual signing the agreement will not be present at the time of fulfillment.
  • Earnings may not keep pace with funeral inflation.

There have been problems with preneed. Major frauds involving embezzlements and scam investments have been found (Funeral Service Insider, 2004). Major funeral firms have shifted preneed trust funds to life insurance policies or surety bonds without seeking the purchasers’ consent (Funeral Service Insider). Also, in bankruptcy proceedings, judges have determined that preneed purchasers are not secured creditors, and are therefore farther down the pecking order for payments if the firm is liquidated (FuneralWire.com, 2003).

In 2000, the Texas Office of Consumers Union issued a report on its review of consumer complaints related to funeral services (Consumers Union, 2000). One-third of the complaints from a two-year period involved preneed funeral contracts. Many were about refunds on canceled or changed preneed policies. According to the report, “Once a preneed policy is written any changes to the funeral arrangements itself (called a partial cancellation in most contracts) can void the contract or create problems in accessing benefits.”

In 2002, AARP’s Bulletin reported that a 96-year-old Gladys Bohn of Modesto, California, had arranged her own funeral and prepaid in 1989. However, when she died, there was no funeral, only a simple graveside ceremony with no casket or flowers. The family sued the funeral home for breach of contract (AARP, 2002). Similarly, FCA has also received consumer complaints about preneed. For example, Aurelia Rivera of Brownsville, Texas, wrote complaining of the substitution of a casket for her mother worth “$1,000 less than the one we had preselected.” FCA recommended she file complaint with the state funeral board in Texas (FCA, n.d.).

Another concern with preneed plans is the portability of these purchases. Most seniors expect to remain in the communities where they have always lived. Nonetheless, seniors move to be near families or friends even at older ages. If they purchased a plan in New Jersey and move to Chicago, is it portable? If not, is there a penalty for canceling? Is the agreement an irrevocable contract? Setting aside funeral or burial funds in an irrevocable account is required for Medicaid eligibility, but is such an agreement beneficial to seniors not receiving these benefits?

According to industry watchers, preneed complaints are increasing. Nonetheless, funeral directors and cemeterians fulfill most contracts to the satisfaction of seniors. The best preneed guidance you can present to your clients is this: It is certainly good to preplan, and make informed decisions.

Consumer Protections

In 1984, following a lengthy political struggle, the FTC issued a trade rule to regulate the funeral industry. The Funeral Rule, as it is called, is a federal regulation and has the effect of law in all states. It applies to both preneed an at-need funeral arrangements, with one exception: preneed contracts that people entered into before the rule went into effect in 1984 and have never modified since that year (FTC, 2000).

The Funeral Rule sets out various requirements for funeral directors but not cemeteries, crematories, monument dealers, or third-party sellers. Under this rule, funeral directors must, among other provisions:

  • Provide funeral price information through price lists available at their place of business and over the phone
  • Secure approval before embalming a body
  • Not require the sale of a casket for a cremation
  • Make no false claim about the preservative value of caskets and outer burial containers.

Industry compliance with the rule varies from city to city. For example, in December 2003, the FTC surveyed 29 funeral homes in the New York City metropolitan area. Of the businesses investigated, 12 facilities were found to be in violation of the rule. According to the General Accounting Office, the “FTC does not have a systematic or structured process for measuring funeral homes’ compliance with the Rule.” However, the FTC maintains that compliance is improving (General Accounting Office, 1999). Even with its shortcomings of limited coverage and enforcement, the rule is a source of rights for seniors in their end-of-life purchases (FTC, 2003).

States also offer consumer protection through their general consumer protection laws, state licensing boards, and preneed statues. These provisions, however – including funding, limitations on the investment of proceeds from preneed contracts, and the percentage of preneed sales proceeds to be placed in trust – vary significantly from state to state (General Accounting Office, 1999).

The information above is reprinted from Working with Seniors: Health, Financial and Social Issues with permission from Society of Certified Senior Advisors® . Copyright © 2009. All rights reserved. www.csa.us