Death Prep: Your Final Financial Plan


When a close family member or friend dies, the last thing you want to think about is paperwork, and you can spare your loved ones that added stress with a bit of planning for what should be done when it’s your time to go.

After a death, funeral plans, financial arrangements and other decisions must be made quickly and can lead to some strife if family members disagree about the arrangements.

But planning your funeral services, life insurance beneficiaries, who gets your money, your home and even your pet can and usually should be determined beforehand. It’s the least you can do to make your loved ones’ lives a little easier when you die.  Here’s what you need to know.

Life Insurance

If your death will cause a family member serious financial suffering, you may want to have life insurance if you don’t already have it.  With it, when you die, your family gets a death benefit which can cover funeral costs and your unpaid debts as well as their day-to-day living expenses, college tuition and other costs for which you might have covered when you were alive.

“Choose your beneficiaries carefully, and make sure you update your policy as soon as anything changes” including marriage, divorce, the birth of a child or grandchild, or the death of a beneficiary, says J.D. Power and Associates. And if any of your beneficiaries are under 18, you should designate a guardian or trustee to manage those assets, J.D. Power says.

Luckily for your heirs, the death benefit isn’t taxed by the federal government, the IRS says.

To calculate how much life insurance you might need, visit the LIFE website.

Funeral Planning

Planning your own funeral entails much more than just deciding whether you want a traditional burial or cremation.

Planning all of the details of your funeral services beforehand, including where you want your funeral held and what kind of casket you’ll be buried in can make life a little less stressful for family members and loved ones when you die.  Plus, grieving loved ones, if given the opportunity, might feel compelled to overspend to memorialize you.

Americans are increasingly planning their own funerals as a part of will and estate planning, according to the Federal Trade Commission.

You can meet with a funeral director at a funeral home or consult a funeral planning or memorial society, the FTC says.

You’ll have to decide whether and where you want to be buried or cremated, whether you want to be entombed or have your ashes scattered along the Pacific Ocean, for instance.  Choosing a location could help you decide on a funeral home since it’s likely easier to choose one nearby.

But preplanning is one thing and prepaying is another.  You can make your plans first and put them in writing only, but if you can afford to pre-pay, you may actually end up saving money. If you pay early enough, you’ll be beat inflation.

For example, the average funeral in 2006, the last time the National Funeral Directors Association released its data, cost $6,195, compared with $2,737 in 1985 and $708 in 1960, the association notes.

Debt After Death

If you die with credit card debt, it won’t be passed on to your heirs, but lenders may try to get their money back from your estate. That means that your heirs may be forced to sell some of your assets, according to the American Bar Association via

If your debt exceeds the value of your assets, creditors will likely take what they can get and write the rest off, the site suggests.

Even though your kids aren’t legally obligated to pay off your debts after you die, that doesn’t mean creditors won’t try to collect from them.  If you do have a sizeable amount of debt, you may want to make it clear to your family members that they don’t have to pay it off when you’re gone.

If you’re a joint accountholder, however, the debts you rack up on that account will be passed on to the person with whom you share it, the site says.

Writing a Will

A last will and testament lists the beneficiaries of your estate: basically the people to whom you want to give your remaining money and property.  But you can also make other special designations.

For instance, there’s a specific part of a will where you can designate a guardian for your pet when you die as well as any assets you want to leave for your pet.

Your will can also include instructions for your funeral and any other special directions that should be followed after your death.

If you don’t have the money to hire a lawyer, you could try one of many online services that help you piece together a will.  For instance, LegalZoom can help you prepare a Last Will and Testament for $59.  However, you’ll have to get a witness to sign it as proof that you compiled your will with a sound mind.

At the very least, you can even draw up your own handwritten will which may be acceptable if it’s verifiably in your handwriting, according to

Video wills have gotten more popular as well, but they can only be used as a supplement to a written will, according to the American Bar Association.

And don’t forget to update your will when you go through any major life changes like a marriage or divorce, the birth or adoption of a child or when a family member or another beneficiary of your estate dies.

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