What is a funeral trust?
Many firms offer funeral and cemetery trust accounts. In Washington State they are established by State law and supervised by a State agency to ensure their safety. When you establish a funeral or cemetery trust account you can pay full amount of the trust immediately or make monthly deposits.
Under law at least 90% of your payments into a funeral trust are placed in a trust account, 50% in the case of a cemetery trust. The selling agency may retain the balance for direct selling expenses. Trust funds are invested in federally insured investments, and the interest income from the investments will increase your account to offset inflation. In fact, it is common for funeral trust accounts to have excess funds which may be returned to the survivors at the time the services are provided.
A major advantage of funeral trust accounts is that the interest earned is almost always two or more percentage points above both that paid on individual savings accounts and the percentage increase applied to the face value of insurance policies. Thus trust accounts grow much faster than either of the alternative funding methods.
The firm you choose to arrange a trust account with will help you estimate the funds needed to provide the services you desire and help you establish an account to provide those funds. They will also place your plan on file so that you may change it at any time.
