Planning Your Own Funeral – Questions about pre-need funeral contracts

Questions about pre-need funeral contracts

I have heard that there are different ways of paying for pre-arranged funerals; is this true?

Yes, there are two ways (called “funding methods”).

  • The first method involves you (the buyer) giving the money directly to the funeral home (the seller). In such a case, the seller must deposit the money that you provide into a trust account. Your contract will tell you where the trust account is located.
  • The second method of funding a pre-need funeral is by an insurance contract.

It is important to understand the details of these options. It is also important to know that the two options are governed by different legislation (and many of the provisions of the Funeral Services Act do not apply to pre-need insurance contracts). As a result, there can be significant differences. For example: a trust-funded plan may have better cancellation rights than a plan funded by insurance. However, often a plan funded by insurance is more easily transferred to another province than a plan funded by a trust. Other areas of difference can include: administration charges, late fees, fees for “extras” and the treatment of inflation.

I had someone come to my door to try to sell me one of these pre-planned funeral contracts. Can they do that?

Not unless you asked them to do so. In fact, it is illegal for a funeral home to sell pre-need funerals over the telephone or door-to-door unless you have specifically requested it. The same applies to a seller of pre-need funeral insurance contracts. In addition, funeral homes may not display or distribute information about pre-need funeral contracts in any home or residence maintained for elderly persons or in any hospital (or its grounds), unless the funeral home first obtains written permission from the management of the home, residence or hospital.

Funeral homes and insurance companies can, however, solicit business by direct mail, media advertising and Internet communications.
If you think a funeral home broke these laws, you can report it to the Alberta Funeral Services Regulatory Board. If the funeral home is found guilty it can be fined and the person involved may be subject to a prison term.

What are a funeral home’s legal obligations when selling a trust-funded pre-planned funeral?

All details of the arrangements and the costs must be in a written contract. As the buyer, you must receive a copy of that contract.

If you are purchasing a trust-funded plan, the funeral home must deposit any money you pay for a pre-arranged plan into a trust account. This account may be a completely separate account, or it may be an account containing the funds received from the sale of more than one pre-need funeral (in other words, your money may be combined with other people’s money). Either way, the money, and the interest earned on that money, must stay in the account until either the services are provided or the contract is cancelled. Although funeral homes may invest that money, only certain kinds of investments are permitted (the safer kind). Appropriate records must then be kept (and that includes a yearly pre-need trust report to the Alberta government).

If, at a later date, the funeral home goes bankrupt, the money kept in trust will be distributed by the courts to everyone whose money was in the trust.

What exactly goes into a contract for pre-arranged funerals?

In Alberta, the law requires that certain specific details be written in a contract (a verbal contract will not do). They are:

  • the professional service charge;
  • the facility charges;
  • the transportation costs;
  • the cost of the casket;
  • the cost of the outer receptacle;
  • the cost of cremation;
  • the cost of the cremation container;
  • the cost of the urn;
  • the amount or amounts, if any, set aside for the payment of taxes;
  • the itemized cost of any other disbursements;
  • the total cost of all items;
  • the terms of cancellation (in not less than 10-point type);
  • the signature of both a funeral home representative and the purchaser (you)

If the contract does not contain the information required by law, you may be able to ask a court to cancel the contract.

Last week, I signed a pre-need trust-funded contract. Now I am having second thoughts. Can I cancel the contract?

Yes, but you may not be able to do so without a cost. Your exact rights of cancellation will depend on the payment arrangements that you made.

  • If you signed a trust-funded plan, you have 30 days to cancel it without charge or penalty. After the 30-day period, you can still cancel the contract, but the seller may charge you an administration fee.
  • If you signed an insurance-funded plan, your right to cancel will depend on the terms of the contract itself. The cancellation rights for trust-funded plans will not apply.

For the exact wording that must appear in trust-funded contracts, you can see Schedule 1 of the Funeral Services Act, General Regulation.

If I cancel my pre-need trust-funded contract and a fee does apply, how much will that fee be?

That will depend on the total cost of the funeral. Currently, the maximum cancellation fee is 15% of the total cost. It should be noted, however, that the maximum cancellation fee is determined by regulation and could change any time that the regulation is amended.

I am considering pre-arranging my own funeral, but I am concerned that what I want now may not be what I want 20 years from now. What if I want to change some of the terms at a later date?

Generally, most contracts contain clauses about what will happen if future changes are required. Pre-need funeral contracts can, too. Be sure to read your contract carefully and, if you are not satisfied with the process and costs for making changes, talk to your provider about it before signing the contract.

What if I make these arrangements and then die when we are out of the country on holiday?

Many pre-need contracts include options for “repatriation”. For example, they can include a specific fee that, if you choose to purchase it, would result in any and all related costs incurred (such as cremation) out-of-province or out-of-country as well as the cost of return transportation. If you travel regularly, you may wish to consider this option. Be sure, however, to understand the exact costs, as not all
contracts are the same: some have a one-time lump fee, others have multiple fees or fees that vary by things such as the duration of the trip(s).

I bought a trust-funded pre-need funeral several years ago. I now want to move to another province to be with my children and I wish to be buried there instead. What can I do?

You can ask the funeral home from whom you purchased the pre-need funeral to “assign” the contract to a funeral home in your new area. This must be a written request. The funeral home will then be required to assign the contract. Be aware, however, that the money (and its accumulated interest) may not be enough to cover the cost at this new funeral home. Be sure to do your research so that you can get as close to the similar services for the same amount of money.

How much does it cost to pre-plan a funeral?

The price varies and depends on many factors. One way to be sure you are getting a fair market price is to get several quotes. Also, be sure that you look at all of the same details: what is “standard” for one plan might be an “extra” in another.

I was very unhappy with the funeral home that I tried to do business with: where can I file a complaint?

You may wish to first bring your complaint to the funeral home itself. If this does not result in a satisfactory resolution, you can file a complaint with the Alberta Funeral Services Regulatory Board (AFSRB), which is the organization created under the Funeral Services Act to consider and investigate complaints regarding the conduct or actions of any person or company licensed to provide funeral services.

Complaints must be made in writing using the AFSRB Complaint Form. Complaint forms are also available from the AFSRB office by calling 1-800-563-4652. For more information on how complaints are handled, please see the “Complaints”section of the AFSRB website.

You should NOT rely on this webpage for legal advice. It provides general information on Alberta law only. November 2013.
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