While you can use money in the estate to pay for funeral costs, there is an important caveat.
The Executor Adviser is an advice column created by Executor.org for Legacy. Executor.org’s experts aim to help readers with questions about executorship and provide comprehensive, free online resources to guide executors through this complex process.
After the death of a loved one, the amount of funeral planning that needs to be done can be overwhelming. Adding to the stress can be the issue of cost.
The funeral is one of the first (and typically biggest) expenses after a person dies. A funeral can include everything from the actual burial expenses and the burial plot to a headstone and casket. All of these expenses can really add up and as executor, you need to know if you can use money from the estate to pay for these costs.
Fortunately, the answer is YES, but with a caveat. While you can use money in the estate to pay for funeral costs, you can’t do it immediately; you will need to treat funeral costs like any other expense of the estate. Therefore, you’ll need to ask the funeral home to bill the estate for the associated costs instead of offering to write a check to cover costs immediately.
There are several reasons why the estate can not pay this bill immediately. First, there are laws governing how money in an estate is distributed. In cases where there ends up not being enough money left in an estate, debts must be paid in a certain order, which is set by law. Funeral expenses are among the first things estate funds can be used for, which means they will likely be paid by the estate even if others are not. It is important to know that a funeral home contract will likely spell out that the person signing the contract will personally guarantee that they will cover the funeral expenses if it turns out the deceased does not have enough assets left to pay the bill. If you are helping to plan a funeral for a deceased person who may not have enough money to pay for a funeral, you need to be aware of this and should choose the most economical options possible.
Another reason you can’t simply write a check without a bill is that payment of debt is technically the responsibility of the deceased. Because of this, the estate’s executor is expected to use the deceased’s assets to pay any debts while at the same time following local laws and the directions of the probate court. While family members or friends could go ahead and pay the funeral costs, they would likely seek reimbursement from the estate to cover the expense. Therefore, it’s easier to get the funeral home to bill the estate instead of going through an extra step. Funeral homes deal with this often and are used to providing the estate with a detailed bill, so you shouldn’t have any problems getting them to do this for you.
Finally, there are practical reasons why you can’t pay the funeral expenses immediately. The will may not have been read by the date of the funeral, and you will likely have not yet created a checking account for the estate. You’ll want to use a checking account created specifically for the estate to pay all expenses related to the estate, and this will take a bit of time to get set up.
Remember, the only person who has the legal right to incur and approve expenses on behalf of the estate is the executor, so the executor should be involved in the funeral planning process. While the family will typically want to honor the deceased’s wishes regarding his or her funeral, keep in mind any budgetary constraints the estate may have. Remember, the money you use to pay for the funeral is money that the estate’s beneficiaries will not inherit. And, as mentioned, if a funeral home requires the person signing the contract to guarantee payment of all expenses, that person is personally responsible for that debt.
Planning the funeral of a loved one can be a very stressful process. Rest a little easier knowing that the funeral home will likely work with you in delaying the billing for it or offering installment payments, and that the estate will likely cover the costs for it.
Have a question about executorship? Get an answer by sending an email to [email protected].
Patrick O’Brien is CEO and co-founder of Executor.org, a free, comprehensive online resource that helps executors manage their responsibilities and duties in this complex role. The free tools include a helpful step-by-step interactive guide for executors and invaluable tips on everything from planning a funeral and keeping beneficiaries happy to dealing with grief and managing estate assets.