Should You Prepay Your Funeral or Buy a Burial Plot Early?

What People Are Actually Buying

"Prepaying your funeral" usually means one or more of these purchases, often from different sellers:

• A preneed funeral contract with a funeral home, covering services such as embalming, a viewing, the funeral itself, a casket, and transportation. The money is usually held in a trust or used to buy a special life insurance policy that pays the funeral home at death.
• A burial plot (technically, the right to be buried in a particular space) from a cemetery.
• Related cemetery items, such as opening and closing the grave, a burial vault or liner, and a headstone or marker.

Each of these is a long-term contract with a business. You pay today, and the business promises to deliver years or decades from now. Whether that promise is kept depends on the business still existing, on you still living nearby, and on your wishes staying the same. Over a 20- or 30-year span, none of those is guaranteed.

Problem #1: The Business Doesn't Last as Long as You Do

The funeral and cemetery industry has changed a great deal over the last few decades. Many family-owned funeral homes have been bought by regional or national companies, merged with competitors, or closed when the owner retired. Cemeteries change hands too.

When that happens, a prepaid contract may technically survive, but collecting on it gets harder. Records get lost in the transition. The new owner may not offer the same casket or service package, and families are told the "equivalent" substitute costs extra. Sometimes nobody in the family knows the contract exists until well after the funeral has been arranged and paid for a second time.

I have seen clients bring in a contract from a funeral home that no longer exists under that name, and the family has to track down who inherited the obligation and whether the trust or insurance money is still there. That is the opposite of sparing your children a burden.

Problem #2: Families Move

This is the problem I see most often. A large number of my clients moved to Utah from California, Washington, Oregon, and other states. Many of them bought burial plots back home years ago, sometimes next to their own parents. Since then, their children have settled in Utah, their grandchildren are here, and their lives are here.

Very few people want to be buried in another state when their spouse, children, and grandchildren live in Utah. Families want to be able to visit. So the plot in California sits unused, and the family buys a second plot here.

Using the out-of-state plot is not a simple alternative either. Shipping remains across state lines involves a receiving funeral home at the destination, transportation (often by air), and permits, and it can cost thousands of dollars on top of the funeral itself. The family may also need to travel to attend a graveside service far from home. The "savings" from buying early disappear quickly.

Prepaid funeral contracts raise the same issue. A contract with a funeral home in Portland or Sacramento does little good when the death occurs in Provo. Some contracts can be transferred to a new provider; others cannot, or only with a substantial fee.

Problem #3: Burial Plots Are Hard to Sell

Clients are often surprised to learn how difficult it is to get money back for a plot they no longer want.

• The cemetery controls transfers. Many cemeteries require that any sale or transfer go through their office, charge a transfer fee, and in some cases have the right to buy the plot back first, often at the original purchase price rather than today's price.
• There are more sellers than buyers. Online listings and plot brokers are full of unused plots. Buyers know this, and resale prices are often well below what the cemetery charges for a new plot.
• Commissions and fees add up. Brokers commonly take a percentage of the sale, and the cemetery's transfer fee still applies.
• You have to prove you own it. If the original deed or certificate of interment rights has been lost, the cemetery may require additional paperwork before it will approve a transfer.

The practical result is that many out-of-state plots are worth far less than what was paid for them, and some are effectively unsellable.

Problem #4: Plans and Preferences Change

The person who bought a plot at age 50 may want something different at 85. Cremation has become far more common than it was a generation ago. A spouse dies and the survivor remarries. Blended families raise new questions about who is buried next to whom. A plot or a full-service funeral package purchased decades earlier can lock in a decision that no longer reflects what you or your family want.

Meanwhile, the money that went into the plan was not available to you. Had it stayed in your own savings, it would have been there for emergencies, for long-term care, or simply to pay for the funeral when the time came.

When Prepaying Does Make Sense

Prepaid funeral plans and burial plots are not bad products. They are often bought at the wrong time. There are situations where buying ahead is the right call:

• You are applying for Medicaid or expect to soon. Utah Medicaid does not count fully paid burial spaces, and it does not count a preneed funeral contract that cannot be revoked or sold (Utah DHHS Medicaid Policy Manual §§ 591-2, 594-3). For someone who needs to spend down assets to qualify for long-term care, an irrevocable funeral contract and a burial plot are among the most common and appropriate ways to do it. The contract must be structured correctly, so coordinate it with your long-term care planning.
• You have a disability and an ABLE account or a first-party special needs trust. Funeral and burial costs are a qualified expense of an ABLE account, which is available to people whose disability began before age 46. The account can prepay those costs during life, and after death it can pay outstanding funeral expenses before the state's Medicaid payback claim. A first-party special needs trust, sometimes called a (d)(4)(A) trust, is more limited. The trustee may buy an irrevocable prepaid funeral during the beneficiary's lifetime, but after death the trust generally must repay Medicaid before it can pay funeral costs. For a beneficiary of that kind of trust, waiting can mean the money goes to the state and the family pays for the funeral. Prepaying is usually the better choice. For more on a trustee's role, see our special needs trust trustee guide.
• You are older or have a serious diagnosis. When the time horizon is a few years rather than a few decades, the risks of business failure, relocation, and changing preferences shrink considerably, and the benefit of having decisions made ahead of time grows.
• Your roots are truly settled. If your family has a long-standing plot in a local cemetery, your children live nearby, and you are confident you will stay, securing a space next to your spouse or parents can be worthwhile, especially in a cemetery where space is running out.
• There is no family to make arrangements. For someone without children or close relatives, a prepaid plan ensures a specific provider knows what to do and is already paid to do it.

A Better Approach for Most People

For most of my clients who are in good health and not facing a Medicaid application, I recommend planning ahead without paying ahead:

• Write down your wishes. Burial or cremation, the cemetery you prefer, the type of service, religious considerations, and anything you specifically do not want. This spares your family the guesswork, which is the real burden, without tying up your money.
• Name the person who will make the decisions. Utah law (Utah Code § 58-9-602) sets an order of priority for who controls the disposition of a person's remains, and it allows you to name someone in a signed writing. That can prevent disagreements between a spouse and children or among siblings, which is especially valuable in blended families.
• Set aside the money in a form you still control. A savings account with a payable-on-death beneficiary, or a modest life insurance policy, puts funds in your family's hands quickly after death. If you move, change your mind, or need the money, it is still yours.
• Make it part of your estate plan. Your will or trust is the natural place to collect these instructions and to tell your successor trustee or personal representative where to find them.

When the time does come to buy, whether because of age, health, or a Medicaid application, you will be buying in the place you actually live, from a business that actually exists, for the arrangements you actually want.

If You Already Own a Plot or Plan You Won't Use

Many of the clients I described above already have an out-of-state plot or preneed contract. Some practical steps:

1. Find the paperwork. Locate the contract, the plot deed or certificate, and any receipts. If the business has changed names, contact the state agency that licenses funeral homes or cemeteries in that state to find out who took over the contract.
2. Read the cancellation and transfer terms. Preneed contracts are regulated by the state where they were sold, and the rules for refunds, transfers, and cancellation fees vary. Insurance-funded plans can often be redirected to a Utah funeral home. If the contract is irrevocable, it may still be transferable.
3. Ask the cemetery about a buyback or transfer. Before listing the plot with a broker, ask whether the cemetery will repurchase it and what transfer fees apply.
4. Consider keeping it in the family. A relative who still lives in the area may want the space. A transfer to family is often simpler than a sale to a stranger.
5. Address it in your estate plan. If you keep the plot, name who should receive it. An unaddressed plot can leave your heirs needing proof of ownership and cemetery approval before they can use or sell it.

Frequently Asked Questions

• Can I transfer a prepaid funeral plan from another state to a Utah funeral home?+
  Sometimes. Plans funded with a preneed insurance policy are often easier to move, because the policy's value can be assigned to a different funeral home. Plans funded through a trust at the original funeral home depend on the contract terms and the law of the state where you bought it. Some allow a transfer or refund, some keep a portion as a fee, and some make the contract irrevocable. Ask the original provider in writing what the contract allows, and get the answer before you are relying on it.
• What happens to a burial plot I own but never use?+
  An unused plot is property, and it passes at your death like other property: through your will or trust if you address it there, or under the cemetery's rules and state law if you don't. Because cemeteries often require proof of ownership before anyone else can be buried in the space or before it can be resold, it is worth naming who should receive the plot in your estate plan and keeping the deed or certificate with your other documents.
• Does a prepaid funeral count against me for Medicaid?+
  Generally not, if it is structured correctly. Utah Medicaid excludes fully paid burial spaces regardless of value (Utah DHHS Medicaid Policy Manual § 591-2), and it does not count a preneed funeral contract that cannot be revoked or sold (§ 594-3). The contract must itemize the spaces, services, and the cost of each (§ 594-1). Paying more than the listed goods and services are worth can be treated as an improper transfer. Because the details matter, have the contract reviewed as part of your Medicaid planning before you sign it.