Where does a prepaid funeral fit into estate planning?

When you think about estate planning, your mind probably goes to wills, powers of attorney and ensuring your assets are distributed according to your wishes. But there's another important piece that's often overlooked: your funeral arrangements.

A prepaid funeral plan may not be the first thing that comes to mind when getting your affairs in order, but it’s a valuable addition to an estate planning strategy. By addressing funeral costs and preferences in advance, you can ease the burden on your loved ones and ensure your final wishes are clearly documented.

Estate planning typically includes several key documents: your will, an enduring power of attorney, enduring guardianship and, in some cases, an advance care directive. You might also consider life insurance and how your superannuation will be distributed. Each of these elements plays a role in ensuring your wishes are known and your loved ones are looked after.

Most wills include a question about funeral preferences. For example, whether you'd prefer burial or cremation. A prepaid funeral plan takes this a step further. Rather than simply stating your preferences, you're making concrete arrangements and locking in the cost at today's prices.

As Steph Moran Guardian Plan’s Head of Partnerships and Growth explains: “many people come to us after they’ve just completed or updated their wills. Preparing a prepaid funeral is not dissimilar to this process – it’s paperwork that helps to protect your loved ones – and it’s very easy to do.”

When someone passes away, one of the first actions families take is to contact a funeral home. This often happens before the will is even read. That's why having your funeral arrangements documented and paid in advance can be valuable.

A prepaid funeral plan simplifies matters considerably for your executor and next of kin. Instead of navigating decisions about funeral providers, service types and costs during an emotionally difficult time, your wishes are already clear.

“Most funerals take place within one to two weeks,” Steph explains. “That leaves families very little time to make a lot of decisions.”

By preplanning, you remove much of that pressure and reduce the risk of uncertainty or disagreement at a time when emotions are already high.

With Guardian Plan, your payments are invested in a trust under APRA (Australian Prudential Regulation Authority) regulation. This means the funds are set aside specifically for the purpose of paying for your funeral.

“The funds are held separately from the funeral provider and can only be used for the funeral,” says Steph. 

Because the funeral cost is covered outside your estate, it eases any liquidity concerns for your executor. If a funeral isn't prepaid, the costs would typically be funded from the deceased's estate, which might require additional steps or approvals.

Guardian Plan prepaid funeral plans may be exempt from the assets test for the aged care pension. This is a financial consideration worth exploring if you're approaching pension age, though it's important to speak with your accountant or financial adviser to understand how this might apply to you personally.

A prepaid funeral plan doesn't exist in isolation. It works alongside the other elements of your estate plan to create a more complete picture.

• Your will might specify your preferred funeral provider or general wishes. A prepaid plan takes this further by outlining specific details and covering the cost of certain elements.

• Enduring power of attorney, enduring guardianship and advance care directives address healthcare and financial decisions if you're unable to make them yourself. A prepaid funeral plan complements these by addressing what happens after you've passed.

• Life insurance might include some funeral cover, but policies vary. Some people choose to have both, using insurance for other expenses and a prepaid plan specifically for funeral costs.

It’s also helpful to keep a record of other important documents your executor or family may need, such as marriage certificates, driver’s licences and superannuation details.

“When you’re grieving, those details aren’t always top of mind,” Steph says. “Having them organised in advance can save families a lot of stress.”

If you've already sought estate planning advice from a solicitor, it might be worth discussing how a prepaid funeral could fit into your overall plan. The process of arranging a prepaid funeral plan is straightforward and similar to the other estate planning paperwork you're likely already familiar with.

A Guardian Plan prepaid funeral specialist can walk you through your options, help you select the services and details that matter to you and explain how the plan would work alongside your other estate planning documents.

Once your plan is in place, it's important to let your family know. Estate planning is most effective when the people who'll be carrying out your wishes know what those wishes are in advance. Having a conversation with your loved ones about your funeral plan, just as you might discuss your will or power of attorney, will help everything run smoothly when the time comes.

Estate planning is about more than just distributing assets. It's about reducing uncertainty, easing burdens and making sure your wishes are clear. A prepaid funeral plan is a valuable part of that process.

If you'd like to explore how a prepaid funeral might fit into your estate planning, speak with a Guardian Plan specialist. They can answer your questions and help you understand whether this option might suit your needs.

Important Information: Guardian Plan is a pre-paid funeral plan where your funds are invested in a funeral bond issued by Over Fifty Guardian Friendly Society Limited (the Society) ABN 81 087 649 063 AFSL 524353. This product is a financial product and may not be suitable for everyone. Before making a decision, consider the Product Disclosure Statement (PDS) and consider whether this option suits your needs, seek independent financial advice if needed.