When a loved one passes, one of the practical questions that comes up is who pays for the funeral. The process can be daunting, but there are ways to figure out who should be covering the costs.
First, note that there aren't any laws that specifically state who's supposed to pay for a funeral. Instead, to determine who is responsible for paying funeral costs, look to the following:
The deceased's estate. Typically, the costs of a funeral are shouldered by the estate of the deceased. Funeral expenses are a priority obligation that will be paid before most other estate debts. If, however, there still aren't enough funds, the person who signed the funeral contract will be responsible for the outstanding amount. As a first step, it's important to check with the executors of the will to determine whether there are sufficient funds to cover the funeral. That will let you plan accordingly. Note that the will likely won't be read or accessible until several weeks, sometimes months, after the funeral, so it won't be very useful to determine the deceased's immediate funeral wishes or costs. The executor is a better bet.
The funeral contract. When seeking payment, the funeral director looks to the person who signed the contract on the day that the services were arranged. Although the service bill may be submitted to, and ultimately paid by, the deceased's estate, the terms of the service contract actually obligate the person who signed on the dotted line to pay the funeral director.
A prepaid funeral plan. Your loved one may have already covered the costs related to his or her funeral through a prepaid funeral plan. However, there are a number of potential problems associated with funeral prepayments. First and foremost, make sure the funds are not being misused by the funeral vendors.
A life insurance policy. Your deceased loved one may have selected enough life insurance to cover funeral expenses. If your loved one had a life insurance policy, meet with the insurance agent to discuss the payout procedure as well as timing. That should give you a clearer idea of when the life insurance policy money will be available to make funeral payments.
Pension or death benefits. Did your loved one receive a pension or death benefits through his or her employer? If so, you will want to look into a potential pension scheme offering help with funeral costs and/or death benefits earned through the deceased's employment.
For more information on who pays for funeral costs, you may want to speak to an experienced estate planning attorney in your area.