One common form of leaving an inheritance to a loved one is to use a trust fund. They are a great way to leave your family members with plenty of resources without having them eaten alive by taxes.
There are several different types of trust funds that can be used for different reasons. Most commonly someone will set up an irrevocable trust to provide a loved one with money after they pass away. It’s a safe and secure way to ensure that your family member gets the money that you want to be left to them, but these are the only uses for trusts. There are other types of trusts that you could use to make your passing easier on your loved ones.
One common type of trust is what’s known as a “funeral trust,” which is characterized as a “pooled income fund,” which is a fancy way of saying that the money inside of the trust ones goes directly towards paying for any funeral or burial expenses after you pass away.
Trusts – What You Need to Know
The concept of a trust is simple, it’s an agreement that a third party, usually a bank or investment firm, will host assets on your behalf until the conditions of the trust are met, and then they will be released to the beneficiary.
There are dozens of different reasons for setting of a trust. One of the common reasons is to pay for a funeral, these are called funeral trusts. Essentially these plans are just a pre-determined amount of money that you set aside to be used to help your loved ones pay for your funeral and burial expenses after you pass away. IT’s as simple as that.
Difference Between Revocable vs. Irrevocable
One of the main distinctions that you should be aware of is the difference between a revocable and irrevocable trust, they are very similar but have one key component that could change the effectiveness.
With a revocable trust, you have much more flexibility, and you aren’t locked into everything that you are with an irrevocable fund. They allow you to alter who the beneficiary of the trust is, you can change the requirements of the trust, or you can even change the property inside of the trust. With these types of accounts, you can change just about anything that you want.
The another type of fund is the irrevocable fund, which is at the other end of the flexibility spectrum. With these plans, everything is locked in once you sign the official agreement for the trust. After you’ve signed all of the paperwork, you won’t be able to change any of the term, the beneficiary, or any of the assets inside of the fund.
There are different benefits to each type of plan, and you’ll need to weigh the advantages and disadvantages to each of them and see which one fits your needs better.
Irrevocable Trust and Funeral Insurance
So, how do these trusts work with funeral insurance? Each of these financial tools can be used to give your family the financial protection that they need, but they accomplish that goal in two different ways.
With an irrevocable funeral trust, you can set one of these plans up with a funeral home. With a trust, you make the terms and then deposit the property yourself. When the trust is paid out, it’s the same property and funds that you put in there. You should choose the funeral home that you want to handle all of the services of the funeral and burial once you pass away. That money will be used solely by the funeral home to pay for all of the goods and services after you pass away. This is an excellent way to ensure that your family isn’t left with thousands of dollars of expenses.
With a funeral insurance plan, they work just like any other insurance plan. You pay premiums every month to keep the coverage effective. These plans are bought through an insurance company, and the process works just like a traditional life insurance policy, but on a much smaller scale. You can purchase these plans anywhere from $1,000 to $25,000 of coverage for your loved ones.
Getting Affordable Funeral Insurance
In most cases, funeral insurance policies are much cheaper than applicants assume, which is why funeral insurance is usually a better idea to fund your final expenses versus an irrevocable trust with a funeral home. You can get a quality and affordable policy at just about any age. It’s a great way to give your family protection without paying the expensive premiums of a traditional life insurance policy.
Because these policies are much smaller coverage amounts, they won’t require you take a medical exam to be accepted for coverage, which means that your health or any pre-existing conditions won’t be used to calculate your premiums, much like that with a guaranteed issue life insurance policy. This means there are fewer things that you can change to improve your monthly premiums.
One thing you need to do is buy sooner rather than later. One of the factors that they will use is your age. The older that you are the more you’re going to pay for your coverage. Every year that you wait, your premiums are going to go up considerably.
The best way to ensure that you’re getting the lowest burial insurance rates is to work with an independent insurance agent. Unlike traditional insurance agents, independent agents can give you quotes from dozens of different companies at once. You don’t’ have to spend hours talking on the phone to different companies to receive quotes, we can do all of the hard work for you.
It’s important that you give your family the insurance protection that they deserve. Without it, they could be left paying for your funeral and final expenses out-of-pocket, and that can easily rack up to a $10,000 bill, which can be difficult for a grieving to pay for. The proper burial insurance plan will give your loved ones the resources they need to pay off any final expenses that they would be responsible for if anything tragic were to happen to you.
If you have any questions about funeral insurance or getting the most affordable rates, we can help you. Our agents would be happy to answer those questions and ensure that you’ve got the best coverage protection for your family. You never know what’s going to happen tomorrow. Don’t wait any longer to get your family the perfect insurance protection for them.