Monday, July 31, 2017

Cutting Expenses When You Think You Can't, PART VI: Death And Taxes

We're all going to age and/or die. 

There -- I said it. 

No matter who you are, or how much you make, you must face the fact: Humans have a 100% mortality rate. Even if Sumner Redstone thinks he's going to live forever...he's not. (And probably shouldn't anyways, since age has just made him more creepy.) 

His case points out the importance of preparing ahead -- in other words, a will or trust. 

It may not seem that critical right now. You're young and full of beans, right? Wills are just for old people.

Well...they're not. 


Do you want to share your possessions with the government? Without a will (i.e., intestate), you can plan on them telling your family what to do. Plenty of celebrities have gone this route, including, recently, Prince -- and they've paid for it every single time in turmoil, family arguments and increased lawyer costs.
      Is that what you want? 

With a will, you can state exactly where you want your possessions -- and hopefully, insurance proceeds -- to go.

A will may be as easy as writing it yourself. Or hire an estate lawyer -- more expensive, but sticky problems may be avoided. This is particularly important if you have minor children. Who's going to take care of them, if you die suddenly? If you don't specify this, they could end up living with court-appointed guardians -- and people you don't want in their lives.
     Another possibility: set up an irrevocable trust -- an option recommended by many financial experts, including Suze Orman. Why is this preferable to a will? Because, according to Investopedia:

The benefit of this type of trust for estate assets is that it removes all incidents of ownership, effectively removing the trust's assets from the grantor's taxable estate. The grantor is also relieved of the tax liability on the income generated by the assets. While the tax rules vary between jurisdictions, in most cases, the grantor can't receive these benefits if he is the trustee of the trust. The assets held in the trust can include, but are not limited to, a business, investment assets, cash and life insurance policies.

     In other words, your money is there to live on now -- but after your death, passes to your heirs without the messiness of tax liabilities or having to settle the estate. You'll need a lawyer to set this one up, too -- but it might well be worth it.
     This is worth checking with your state -- what do they allow, and what don't they. It may be different...and may not. But you need to start asking these questions NOW.


An average cremation, based on People of Our Everyday Life's findings, starts around $1,000. The cost of an average funeral, on the other hand, hovers around $7000 -- probably more. Neither of those prices, by the way, includes a fancier casket, service -- or, in the case of the funeral, a burial plot. (Add $2000+ for the latter.) Just for fun, I checked my home state, Colorado's, cremation pricing. A 'bare bones' package from the Cremation Society: $1,195. Services, 'viewings,' etc. cost even more.

What's to be done?

*Donate your body to science. Not just the organs -- though those are valuable too, through the organ donor program -- but your entire body can help students and medical researchers learn their art more effectively. The National Body Donation group is one possibility; in Colorado, we also have the Anatomical Board. Your state will have some kind of program, too -- just do a search for 'donate your body to science.' (Here's a good spot to work through the process, as well.)
     Our Michigan uncle and aunt both did this, at no cost to their families. Eventually, their cremated remains were returned, so they could be respectfully interred, if desired.
    Warning: the paperwork has to be completed NOW. Be sure to talk with your family about your wishes, if you want to do this.
     I have.

*Sidestep the embalming process. Some states allow you to do this -- others don't. Check.

*Order a coffin yourself -- or make one. Did you know you can order a casket online -- and delivery could be free? Or build your own simple pine box -- one of our pastors was buried in one his family made. I still remember the simple, yet meaningful graveside ceremony for his funeral.
      Cremation urns don't have to be fancy, either. A simple box will do. (Rules also change for these from state to state, and from funeral parlor to funeral parlor. Be sure to check yours.) Scatter the ashes in your loved one's favorite spot, and you've saved the cost of a burial plot.

*Think about a simpler funeral.  No elaborate service, handouts or 'viewing' in a funeral parlor will cut your costs. (The church you attend may be a better place, instead.) Funeral flowers are notoriously expensive, not to mention gaudy -- deliver a simple bouquet yourself, or put the money spent into a memorial cause, instead.
     A growing trend: don't have a service at all. Or just a graveside ceremony for close family and friends. (By the way, obituaries are not generally free, anymore -- at least in our region, there's a cost to include them in print. Funeral homes, on the other hand, may provide them as part of the package. Another thing to check.)

*If you're a veteran, the gravesite, opening/closing and headstone may be free. Check with the Veterans Administration, or go here for more information. 

*Instead of spending money on funeral costs, consider using it toward a scholarship or special donation, instead. Many groups would be happy to help you set this up -- and it would serve as a reminder every year, instead of a one-time splash. Memorial plaques (on benches, near planted trees, etc.)  are also a respectful way to honor your loved one's memory.

*Think twice about prepaying for a package. Although this is touted as a budgetsaving way to control funeral costs, it doesn't always make sense. What if the funeral home closes...or arbitrarily raises prices? What if you move, remarry (in the case of a lost spouse), or something else happens? If you do decide on a package, read the fine print carefully -- including any refund clauses.

*What happens if someone you love dies -- and now you have to make the arrangements? Particularly if they died, owing money? You can use these same suggestions to save for their estate. Or, as Sally Herigstad points out, do nothing at all.  If no one claims the body, then the state or local government will step in. (And yes, you won't know what happens.)

You can see other installments on the 'Cutting Expenses' series, just by accessing Part I and scrolling to the bottom of the post. Choose what helps you most right now, and start there, if you like. Or go to the last one on the list, and work your way back.

Just a few more posts to go:  Income Hacks, Bits & Pieces-- and the Conclusion

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