Who pays for your funeral?
Most Wills have a clause directing the executors to pay funeral expenses as well as other usual estate liabilities. Often there is also a clause saying whether you want burial or cremation. Are these directions binding?
Surprisingly, a direction in a Will concerning cremation or burial is not necessarily binding. The law has long said that no one owns a dead body and therefore there cannot be any binding directions. The New Zealand Supreme Court has ruled that:
- These decisions should be made in the first place by the executor or executors named in the Will
- When making these decisions executors must act reasonably and consider the views of the deceased and family, and
- If anyone disputes the executor's decision, then this can only be resolved by the High Court.
Those points were decided in a 2012 New Zealand Supreme Court case
[1]. The court also agreed that the estate should meet funeral, and cremation or burial costs. The executor/s should pay those costs if there is money available. If there is no executor then the family has responsibility for the funeral.
It's also quite hard for executors to get out of paying funeral expenses by saying there is no money in the estate. In a 2004 case
[2] , the only asset in the estate was a one-third share in a property. The widow owned the other two-thirds share and had a lifetime right of occupation. Nevertheless the court ruled that the executor was obliged to pay for the funeral out of the estate. The executor had to raise a loan secured against the one-third share in the property. The amount of the loan, with interest, will have to be repaid when the property is sold.
The funeral director will expect to be paid from the estate. It is usually the family members who arrange the funeral. They will look to the executors to cover the cost if possible. However, if there is really nothing in the estate then the family members who signed the funeral director's forms may themselves be liable for the cost.
Possible government assistance
It's possible to get a funeral grant from the Ministry of Social Development/Work and Income. However this is subject to an income and asset test, and the person who died must have normally lived in New Zealand. As at 1 April 2015 the maximum funeral grant was set at $2,008.76. The Ministry will also look at the assets of the estate and any surviving spouse or partner. If the person who died was under 18, MSD may take into account the assets of the parents. It's also be possible to obtain help with funeral costs from ACC or Veterans' Affairs – in some cases.
Pre-paid funerals
Because of the high cost of a funeral, many people want to relieve their family from the burden of paying for this. One option is to make an arrangement with a local funeral director to pay for the funeral in advance. This may restrict your family's choice about who will organise the funeral. The arrangement will usually have some built-in adjustment for increased costs due to inflation.
Another alternative is a funeral trust. This means money is held in a trust fund and interest is earned on the money. This is then available to meet the costs of the funeral. A number of pre-paid funeral trusts have been approved by the Ministry so that the amount in the trust will not be taken into account if you apply for a subsidy for your long term residential care.
Points to remember
It's helpful to say in your Will what sort of funeral, or burial or cremation you want. This gives guidance to your executors and family. You can also include an organ donation clause but you need to discuss this with your family and your doctor: your Will may not be read until after your funeral. The funeral costs normally come from your estate but the family should be involved in arranging the funeral. Some financial assistance is available from Work and Income in cases of hardship. It can make it easier for your family if you have a pre-paid funeral or funeral trust.
[1]
Takamore v Clarke [2012] NZSC 116
[2]
Public Trustee v Kapiti Coast Funeral Home Ltd [2004] 3 NZLR 560
