Monday, September 17, 2012

Pre-Paid Funeral Services: Are they a Good Option or a Scam?

When a loved one dies, grieving family members and friends often are confronted with dozens of decisions about the funeral - all of which must be made quickly and often under great emotional stress.  This is something I experienced firsthand last year with the passing of my beloved 88-year old mother, Dot.

Each year, families struggle with these decisions as billions of dollars are spent arranging more than two million funerals in the U.S. alone.
The increasing trend toward pre-need planning - when people make funeral arrangements in advance - suggests that many consumers want to compare prices and services so that ultimately, the funeral is not just meaningful, but also reflects a wise and well-informed purchasing decision.
Some view pre-paid plans as a way to hedge against inflation as it allows them to lock in today's prices. Others take the step simply to spare survivors the burden of arranging and paying for a funeral.  Whatever the reason, today about one in four Americans over 50 have paid in advance for a funeral service, according to AARP.
While pre-need planning, or pre-paid funeral services, can spare family and friends difficult decisions and a hefty financial burden, it is important to know what you are purchasing and how to protect your investment from abuse.
Recently, our office successfully prosecuted Todd Lauzon for embezzling approximately $127,000 from people who purchased pre-paid funeral services through his funeral home. 
Between 2002 and 2009, Lauzon, owner and operator of the Lauzon Funeral Home in Woonsocket, accepted money from individuals for pre-paid funeral services. He later submitted fraudulent documentation on behalf of the clients, terminating the contracted services and converting the funds for his own use. 
This was a despicable act of greed by an individual who took advantage of those seeking his comfort and advice.  Families put their trust and money in Todd Lauzon to take care of their loved ones foreternity, only to be betrayed and left in the dark during their time of mourning. 
While this case involves a criminal act by a desperate man, I hope you will use this as an opportunity to carefully research pre-need services, know the abuses involved with the services and protect yourself from fraud and abuse.
Among the abuses involved with prepaid funeral plans are:
Lack of portability. The plan can only be used to obtain goods and services at a single funeral home or cemetery. Often a substantial penalty is imposed for cancellation.
Unexpected expenses. At times the purchaser's survivors find that a plan does not cover all funeral and burial expenses, and that an additional amount is required in addition to the "guaranteed" expenses.
Marketing abuses. Many sellers of pre-need plans use high-pressure sales techniques. The seller generally tries to convince the purchaser to buy more expensive goods and services.
Difficulty in detecting fraud. Because there is potentially a time lag of years between the purchase of a plan and the purchaser's death, it’s easier for fraudulent sellers to vanish before their fraud is uncovered.
Before purchasing a prepaid funeral or burial plan, consider the following tips:
Be sure to compare prices. Costs for funeral merchandise and services can vary drastically. The Federal Trade Commission's Funeral Rule requires itemized cost disclosures from funeral directors, though it does not cover cemetery sales.
Review the plan carefully. Request a copy of the proposed contract and financial information about the plan itself. Review all documents with an attorney, accountant and/or a financial advisor.
Visit the facility. Do not depend on the good faith of the person selling the plan, especially if it's a door-to-door sales pitch.
Investigate the seller's reputation. Check the company out with the Better Business Bureau, funeral boards, attorney general's office or consumer protection agency. If you suspect fraud, act fast. The quicker you act, the greater the chance you’ll have of regaining any funds you have invested in a pre-paid plan.
Let your family know where the policy paperwork is located. If you do decide to purchase pre-paid funeral services, it is important you discuss this decision with family members, or whomever will be in charge of making arrangements once you pass, and make them aware of location of the paperwork.
If pre-paid a funeral doesn't seem right for you, consider alleviating the burden on your loved ones by at least outlining your wishes and notifying them of how everything should be paid. In the long line of adult tasks we each have to do, this is one final detail that will bring relief at a trying time. Although, it is my sincerest hope that this time for you and your loved ones is far into the future.