Pay funeral expenses

Pay service providers directly

• The executor, next of kin, family, friends, or other person, pays all necessary expenses out-of-pocket
• If the deceased’s bank account was jointly owned, the surviving joint owner can submit payment directly from the joint bank account
• Regardless of who pays, keep receipts of all payments so they can be classified as an estate expense during the legal probate process
• Once an executor or administrator is authorized by the probate court, submit an invoice to the executor with an itemized list of all items paid for out-of-pocket, along with receipts. The estate will be responsible for reimbursing individuals who paid estate expenses out-of-pocket once the estate bank account is opened.
• If issues arise and the estate does not reimburse individuals for out-of-pocket expenses, those individuals can file a claim against the estate in probate court, however they may need the assistance of a probate attorney to do so. All states have their own unique timeframe for submitting a claim, so review state law to determine how long an individual has to make a claim on an estate. Claims made after the state-determined deadline (e.g. 6 Months) do not have to be paid by the estate.

Use life insurance proceeds to pay funeral expenses

• If the deceased had a life insurance policy, proceeds from the life insurance policy can be used to pay for funeral expenses. This helps individuals avoid the need to pay for funeral expenses out-of-pocket, but will reduce the amount of life insurance proceeds that go directly to the named beneficiary. Only the named beneficiary can approve of using life insurance proceeds to pay funeral expenses, unless the deceased stipulated that life insurance was to be used for funeral expenses in their will.
• Some life insurance include a “death benefit” which can be paid by the life insurance company directly to funeral service providers. In these cases, a funeral home is typically listed as a beneficiary to the “death benefit” portion of the policy.
• If the deceased stipulated that life insurance proceeds were to be used for their funeral in their will, the life insurance company may pay the funeral service provider(s) directly. Otherwise, life insurance proceeds can be deposited in the beneficiary’s bank account, then the beneficiary can make a payment from their bank account if they opt to pay for funeral expenses.
• Some life insurance policies may allow the beneficiary to assign a life insurance policy to a funeral home in order to pay funeral expenses. In this case, be careful not to assign more than is needed for the total sum of products and services owed.

Funeral home submits a claim to the estate

• Although uncommon, funeral homes may file a claim against the estate in order to be paid for services rendered.
• Because funeral costs are priority claims that are most often paid first, some funeral directors may be willing to collect payment from the estate at a later date, often once the estate bank account is opened.

Funeral providers may charge a “basic service fee” for common services necessary for all funerals, such as funeral planning, securing permits and death certificates, and coordinating arrangements with a cemetery or crematory.

There may be additional costs as well, such as use of the funeral home for a viewing, use of equipment for a graveside service, and use of a hearse.

Some funeral providers also charge cash advances that are used to pay third-party vendors for funeral-related products and services, such as flowers, clergy, and organists.

The federal trade commission employs a “funeral rule” which requires that funeral service providers disclose any extra service fees in writing.

The rule also requires that funeral service providers notify customers if there are any refunds, discounts, or rebates available for cash advance items.

The funeral service provider must also give customers an itemized statement of the total cost of goods and services when the arrangements are made.

If the funeral service provider does not know the cost of cash advance items up-front, they are still required to provide a “good faith estimate” of the costs.

Read More For more information about your consumer rights, read the "Know your rights when purchasing funeral services" Task of the Guide.

If the estate does not have enough money or assets to pay its expenses, it is considered insolvent.

When an estate is insolvent, state law determines the priority for paying the estate’s debts.

High priority debts must be paid first, and if there is not enough money to pay all of the estate’s bills and debts, lower priority service providers may not get paid.

Payment priority differs from state to state, but are typically made in this order:

1. Funerals - any products and services purchased for funeral or memorial services, including burial and cremation
2. Family - payments needed for the ongoing support of the deceased’s dependents (e.g. spouse, children)
3. Estate Administration - costs for settling the Estate, including court fees, attorney’s fees, and the upkeep of estate property
4. Government - any outstanding payments owed to state or federal government including back taxes, interest, or penalties
5. High Priority Creditors - expenses related to high priority creditors to whom the deceased owed payment (e.g. home mortgage)
6. Medical - expenses related to the medical support of the deceased (e.g. hospital or hospice care)
7. Unpaid wages - outstanding payments owed to employees of the deceased
8. Unsecured debt - additional debt the deceased had including credit card debt and payday loans

This means the estate’s assets will typically need to go toward payment of funeral expenses before any of the estate’s other bills are paid.

However, it is worth noting that a probate court must officially declare an estate, “insolvent” if the estate is unable to pay its debts.

Read More To learn more about Insolvent Estates and paying the deceased debts, review the Task, “Determine Estate Solvency."