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Dying is an expensive business

Discussion in 'Estate Planning' started by TryHard, 26th Jun, 2008.

  1. TryHard

    TryHard Well-Known Member

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    My father passed away a couple of days ago (He was 81, and with 5 long, bad weeks in hospital, it was a relief to see him finally find peace) which gave me my first experience of funeral homes.

    As an only child, I took Mum with me to get the arrangements done while we were both still in that initial state of shock. I got a lot more shocked by the time we'd finished !

    Dad had the foresight to invest in a "Basic Direct Committal" - he was a very spiritual but not-at-all religious person, so he had the most cut-price of everything. He just wanted the resulting ashes spread on his favourite spot on the farm. He would have had himself rolled into a hole at home if it wasn't so complex to organise legally !

    He set the funeral fund up 3 years ago with an 'investment' of $2,650. At that point the funeral directors offered a fixed price guarantee at that $2,650 or the 'variable' option for the service at $2,100, which would leave the balance available to mum at the end. Unfortunately he chose the variable price option (presumably he'd not expected any events likely to cause a major price rise, and thought mum might like to buy a few bottles so we could all toast his life, with the leftovers).

    In 3 years, his investment had grown to a fairly unimpressive $2,900 (I say unimpressive as I assume the funeral people have it invested somewhere doing better than a few percent per annum). However, the fees themselves had risen from the expected $2,100 to $3,500. The 'salesman' asked mum and I if we understood all the costs, and I said sure we did, but I could guarantee him there was some fairly unholy language being directed at him by Dad from the other side.

    As there is no ceremony (we will have our own at home), the funeral people only needed to pick dad's body up from the hospital 2km away, place the body in a coffin, and take the body across the road to the crematorium. The fee for this part alone is $1,850 (up from $900 on his initial variable price quote). I will never again complain about another professional's fee ! The rest of the costs are crematorium, paperwork etc. In the end, after minor "unders and overs", Mum was required to fund an extra $450, which fortunately she was able to do (of course we would have done it for her, but it was important for her to see Dad's plans actioned from what he had proudly left in place for her).

    If it wasn't so insignificant in the grander scheme of things, I'd be pretty angry. With daytime TV on the last couple of days, I noticed there are also plenty of spruikers for "funeral plans" - I never absorbed them before we needed to use one.

    I assume most of these funds operate similarly, and if we want to leave something aside to ensure our loved ones can see us off with no further worries, we should invest a basic sum between $3,000 - $5,000 in today's money in some sort of conservative on-call investment, and that would be better than handing it over into a 'funeral plan'. That of course assumes the burial industry doesn't jack prices up by more than we can achieve in compounding interest from any investment. No idea what justifies 100% fee increase in 3 years or whether it would happen again industry-wide - and of course there's no such thing as price-fixing !

    Just thought I would share that experience as most of us will need to go there at some time or another.

    At least the old bloke is at rest now, but his focus on the pennies, and anger at people who try to take advantage of him, lives on as a legacy ;-)

    Cheers
    Carl
     
  2. Nigel Ward

    Nigel Ward Team InvestEd

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    Very sorry to hear of your loss Carl.

    Sounds like an unpleasant surprise at an already extraordinarily difficult time...:mad:

    Sadly these special purpose funeral bonds, like the "education bonds" marketed to people are no where near as effective as just prudently investing your money in shares and property to ensure you have a general surplus of cash/assets as needed.

    It's an example of a behavioural finance phenomenon called "mental accounting". Much like some people keep a few thousand in their savings account for "contingencies" earning a paltry interest rate whilst carrying forward a balance on their credit cards and paying 17-24% on the balance.

    Despite what the economists say we're not rational creatures...but what value peace of mind for your Mum I guess...

    Cheers
    N.
     
  3. TryHard

    TryHard Well-Known Member

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    Thanks heaps Nigel - and thanks for confirming my thoughts about these so-called 'plans'. I guess there is an easy market for the peace of mind oldies want for their exit. Luckily for Mum the financial impact wasn't as bad as it could have been, I think we both found some connection or comfort in immediately knowing what the old man would have been ranting about if he was there :)

    Still there was lots of non-ranting things he did too - which I guess is what I should dwell on :) He had a pretty rich and varied life from scouring the woods in England for german paratroopers when he was 16 years old in the cadets (not at all bravely he reckoned :)) to owning a farm in his 20's and a restaurant in Jersey in his 30's, to becoming a 10 pound pom and painting houses for a living in the land Down Under, another restaurant, a wholesale nursery, and a few other things besides. In his 60's he and mum pretty much single handedly renovated the first 3 properties I bought.

    Most recently the internet and eBay provided some of his most enjoyable moments and he even had his own web site ( Collectables, arts and crafts and valuables - watneys.com ) he set up when he was mid-70 ! I think he would have liked another few decades to see what else he could turn his hand to, and if his spirit is living somewhere else already I think the host body will be pretty busy ;-)

    I think Dad would not have been viewed as 'successful' by the sort of criteria we normally consider when taking stock of our worldly position. On reflection though, his happy 40 year marriage to my Mum, retirement to their beloved secluded 'farm' and some of the thoughts he recorded at http://www.watneys.com/poetry/ all confirm my gradually changing values as I try to spend a lot more time smelling the roses that are here, instead of calculating how many roses I can afford to plant in the years ahead. :)

    He loved his rider mower too - I'm off to mow our unkempt front yard in his honour :) A bit of sunshine on the face in times like this never hurts :cool:
     
  4. eddyl

    eddyl Well-Known Member

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    Same thing happened to me. What annoys me is you want to get your loved one buried/cremated with the less grief, and just be left to mourn. However, I found that the funeral palours act in the most predatory way, taking advantage of you when you are probably at your least rational. What is bad is that I'm not sure/had the inclination to research into other options if you do pass away. Like you said it should be a pretty easy process of just getting cremate and thats it (even the jar costs).

    What is to be sure though is that they make a killing.(pun intended)
     
  5. lorrimer

    lorrimer Well-Known Member

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    Very sorry to hear of your loss Carl. But it sounds like he really made the most of his life and squeezed in as much as he could during those 81 years, which is all any of us can hope to do.
    My Dad would also have been 81 this year, but his ticker gave in back in 92 aged 64.
    I know he felt a bit cheated that he wouldn't get to enjoy his retirement years.
    Best wishes to you and your family.
     
  6. TryHard

    TryHard Well-Known Member

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    Thanks again all. I wasn't sure whether to post about funerals because some people find it a bit morbid, but given the old adage about death and taxes, I figured its relevant on a forum where people plan for their futures, and there is only one certain end to all of this :p .

    Lorrimer sorry to hear your Dad left us at 64 - there is no doubt we should all be happy with anything nearing the innings my dad got to enjoy. In fact I suppose any day we spend upright is a bonus, as they say in the classics.

    Eddyl - yeah predatory was the prevailing feeling for sure. Given dad had done the bare 'nil ceremony' thing when Mum asked the guy if there was a time she could turn up just to be at the site at the time of the cremation, he said she could but it would involve additional charges (!) because it would involve 'co-ordination'. Doesn't make you very appreciative of what little they did for their fee. Anyway, it's done now, and we pick up his ashes tomorrow, and spend a family weekend reflecting on his life and getting rid of some of Australia's excess vino production ;-)
     
  7. Billv

    Billv Getting there

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    Carl

    Sorry to hear of your loss mate
    I have been fortunate not to have gone through such experience yet.
    My parents are 83 and 87yo hopefully they will keep going for a while...:)
    Thanks for sharing your experience

    Cheers
     
  8. TryHard

    TryHard Well-Known Member

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    Hey BV ... Thanks mate - I hope your mum and dad have many good years ahead. My wife's grandmother is hitting the century soon (sadly she has been a pain in the a*** for at least 70 years ;-) )
     
  9. Jacque

    Jacque Team InvestEd

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    Hey Carl

    So sorry to hear about your dad- doesn't really make any easier just because he was older at 81- my thoughts are with you and your family.
    He sounds like he was quite a character and was well loved. Quite a role model, from what you've shared. Savour those memories
    *Hugs to you from me*
     
  10. bella

    bella Well-Known Member

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    Hi Carl, sorry for your loss. I hope you and your family can celebrate your fathers life with a smile.


    Question: with those funeral plans, one of the selling points is that is is paid out quickly after death. If you were to make a on-call DIY fund for this purpose, how can you ensure that it is easily accessable in the case of your death? The last thing you want is your family having to temporarily picking up the tab from their own funds while your estate is in untouchable legal limbo.
     
  11. TryHard

    TryHard Well-Known Member

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    Thanks so much Jacque :). We have a lot of good memories to look back on.

    Thank you Bella :)

    In terms of accessing funds quickly, I suppose some form of electronic transfer to the beneficiary's bank, by the beneficiary who was provided with the access details, might work ? I guess the investment would have to be on-call rather than term deposit, thanks to the 'uncertain' nature of when we're gonna die. A lot easier if there is a surviving partner I suppose. I must admit there was no delay with the funeral home option, they couldn't have moved any quicker !
     
  12. RobertHolmes

    RobertHolmes Member

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    Cost-effective alternative

    Hi all,

    My dear Father passed away on Friday, after a long battle with dementia/heart failure. May he rest in peace.

    Characteristically, many years ago he researched the most cost effective way to deal with his earthly remains - donating his body to the university, and included this in his will. In Sydney see: Body Bequest program google "body bequest" for other similar programs in other locations.

    Of course this "funeral plan" may be distasteful or inappropriate for some, but I just thought I'd alert the community to this option.

    I miss you, Dad; and pay tribute to your ability to delay your gratification, allowing you to retire early (from manual labour) and self-fund a long retirement.

    Cheers, Robert
     
  13. TryHard

    TryHard Well-Known Member

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    Very sorry to hear of your loss Robert, and hope you have lots of good memories

    All the best
    carl
     
  14. Billv

    Billv Getting there

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    Robert

    I am sorry to hear of your loss and thank you for letting us know of the university body bequest program.

    It takes courage to sign up to this program so you should be proud of your dad.

    Regards
     
  15. Rob G.

    Rob G. Well-Known Member

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    Commiserations to all.

    I personally have an aversion to the way these "funds" scare relatives into thinking they will be financially liable for their loved ones' funeral arrangements.

    In fact the deceased's estate is responsible through their Legal Representative.

    I will tell you about a friend's parting financial plan, although I am not providing financial advice.

    This person had few assets save the family home, car, super and life insurance. He was married, carried many debts and was suffering progressive heart failure and knew his time was near.

    He knew that debts are not inherited. He also held the family home as joint tennant with his wife so if he died the property would not pass to his estate to satisfy his creditors, but go directly to his wife.

    He cashed in his life insurance and had a great time (as far as his health would let him) but left his debts as they were.

    When he died the house and superannuation reverted directly to his wife and not via his estate, which had numerous creditors.

    The only asset of note was the car which was sold at a good (fire-sale) price to one of his sons by the Solicitor (executor) to help pay legal and burial fees. The credit card companies unfortunately did not get much if anything.

    This shows the value in estate planning of the way you hold title to assets, and the binding nominations you make in your superannuation fund.

    Again, this is not financial advice but just be wary of how these funeral funds try to scare you into thinking you inherit debts and you have to clear it up.

    Cheers,

    Rob
     
  16. Terryw

    Terryw Well-Known Member

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    This is a great strategy. I have also though about living off equity and then leaving a property highly geared with a high CGT bill to match.

    Borrowing up big on credit cards is good, but only if you had no assets. My friend tried this. He used up $90k in credit cards and then told me he wanted his house sold the day he died and the money put into a trust for his kids so the credit card company couldn't get at it. I told him it didn't work that way. Any debts left have to be paid for out of the estate - if only he had sold his house before he died.

    impecuniously yours