Duker and Haugh Funeral Home offers a wide range of options to families considering Funeral Pre-planning. This booklet is designed to assist people in learning more about Funeral Pre-planning. Obviously, however, it cannot contain every piece of information necessary. We, therefore, invite you to visit our pre-arrangement center and talk with one of our staff members concerning Funeral Pre-planning. AN INTRODUCTION TO FUNERAL PRE-PLANNING Since the early 1980s, public interest in Funeral Pre-planning has grown rapidly. More and more people are choosing to pre-arrange funeral services either for themselves or other family members. The reasons for Funeral Pre-planning are varied. In some cases, people simply wish to take care of their own funeral arrangements in advance either to ease their own minds or to remove the burden from other family members. In other cases, family members choose to make arrangements for another family member. This is often done to make such arrangements at a time of minimal stress. Still others choose to take care of funeral arrangements for financial reasons. Selecting a funeral plan while funds are still available can have obvious advantages. While the reasons go on and on, it should be noted that Funeral Pre-planning is not for everyone. Some people object to considering such issues prior to the actual need. These feelings should be respected and Funeral Pre-planning should not be forced on anyone. The staff of Duker and Haugh is available to discuss each particular person’s individual situation. Through such discussions an appropriate alternative can be determined to meet one’s particular needs. LEVELS OF PRE-ARRANGEMENT Today, people come to us to discuss Funeral Pre-planning under a variety of circumstances. Generally, however, most will pursue one of the following three levels of pre-arrangements. Level 1. Some people pursue Funeral Pre-planning by simply providing the funeral home with general information concerning their wishes for their funeral. Obituary material is often given, location of cemetery space is identified, and the type of funeral preferred is generally discussed. This information is kept on file at the funeral home to assist other family members with funeral arrangements when the need arises. Level 2. Other people choose to move beyond the first level of Funeral Pre-planning and become very specific in discussing their arrangements. In addition to providing the information above, many of the particulars are specified. The type of service, casket, and vault is often selected, and other information such as clergy preference, flowers, etc. is identified. Quite often a cost estimate is prepared to give the person an ideas to the total price of the desired arrangements. Once again, this information is kept on file at the funeral home for use by family members at the appropriate time. Level 3. After moving through the first two levels, many people choose to pursue the third level of Funeral Pre-planning and actually pay in advance for the arrangements they wish. In this case. a Funeral Trust Agreement is established between the individual and the funeral home. This formal agreement spells out exactly what is to be provided and guarantees the patron that the funeral arrangements they have selected will be provided at the time of death, regardless of how long they live. In Summary, Funeral Pre-planning can take a variety of forms and our funeral home is equipped to take care of each individual’s wishes as it relates to their funeral arrangements. FUNERAL TRUST AGREEMENTS Perhaps the most common form of funding and funeral pre-arrangement is through a Funeral Trust Agreement. This is a contract between the funeral home and an individual person for the purpose of pre-arranging a funeral for someone. The agreement specifies who the arrangements are for, what exactly the funeral home will provide at the time of death and how much money the patron paid to the funeral home to provide the arrangements. The Duker & Haugh Funeral Home is fully licensed by Illinois to accept such funds for pre-arranged funerals. Annual reporting of funds is required and periodic audits are conducted by the Comptroller’s office. When we accept funds for a pre-arranged funeral, They are placed into a separate trust account for the individual person. Deposits are made either in a Quincy financial institution or with the Illinois Funeral Directors Association in Springfield. These funds are held in trust until withdrawn at death. WHAT ABOUT INTEREST? Funds for a Funeral Trust earn interest from the day they are deposited until the day the are withdrawn. It is the interest earned that allows the funeral home to guarantee the arrangements regardless of how long a person lives. The interest earned by the account is used to offset any cost increases that may occur in the agreed upon funeral arrangements. Let’s say, for example, that a person establishes a funeral trust in the amount of $8500. At the time of death, $1000 has been earned in interest and there is a total of $9500 in the account. The funeral home prepares an exact listing of the current cost of the agreed upon arrangements at the actual time of death. If the cost have risen to $9600 for example, everything is still provided for the $9,500 available. If the costs have only risen to $9,400 for example, then the excess $100 in the account is refunded to the person’s estate. In other words, the Funeral Trust Agreement guarantees a person that the agreed upon funeral arrangements will NEVER cost more than the amount of the original monies paid plus accumulated interest from the account. IS INTEREST TAXABLE? As with any other bank account, interest earned from a Funeral Trust Account may be taxable to a particular person. In some cases, this is not a problem because the person involved is not earning enough money to be liable for income tax. In other cases, however, this can be a disadvantage. It was for this reason that the Illinois Funeral Directors Association has made available to us a plan for TAX EXEMPT Trust Accounts. Money deposited in these types of accounts still earns interest but it is not taxable. Many people find this approach much more suitable to their particular needs. At the present time, our funeral home has a variety of options available to people concerning how their funds are deposited. Each is designed to best suit a particular person’s individual situation. MAY FUNDS BE WITHDRAWN BEFORE DEATH? At Duker & Haugh, when a Funeral Trust Agreement is executed, the funds remain the property of the Patron. The only exception to this is when Public Aid requires that the agreement be irrevocable. A person may therefore withdraw the funeral trust funds and cancel the Funeral Trust Agreement at any time. PUTTING IT ALL TOGETHER In summary, a Funeral Trust works this way: A person decides with the funeral home all of the specifics of the funeral they wish for themselves or another family member.  A Funeral Trust Agreement detailing the arrangements is drawn up and signed by the patron and the Funeral Home.  The amount of money necessary to provide for the desired arrangements is paid to the funeral home by the patron.  The funds are deposited in a financial institution, earn interest, and are held until withdrawn to pay for the funeral expenses at the time of death. FUNERAL TRUSTS & PUBLIC ASSISTANCE Today, more and more people find themselves facing the difficult decision of seeking assistance from the Illinois Department of Human Services. A lengthy hospital stay or extended confinement to a nursing home can often exhaust a person’s financial resources. When this occurs, Public Assistance may be the only answer to provide for continued care. In recent years the Illinois Department of Human Services, in cooperation with the Illinois Funeral Directors Association, has made substantial changes in regulations that relate to funeral pre-arrangements. This brochure is designed to provide people with an overview of current Public Aid law and explore some options that may be available if the need for assistance arises. What Public Assistance Allows. To be eligible to receive assistance from Public Aid, There are limitations as to the assets a person may have. The law currently states that they may then have a maximum of $2,000 in cash assets to be eligible to receive assistance from Public Aid. However, in addition to the $2,000 maximum that a person can have in cash assets, a person can normally have a fully funded funeral pre-arrangement. The pre-arrangement would normally be funded in the form of an irrevocable funeral trust. Public Assistance looks at funeral trusts as being comprised of both exempt and non-exempt assets. Currently a person can have $5,219 in non-exempt assets (services, etc.) in an irrevocable funeral trust in addition to the $2,000 in cash assets they personally hold. Exempt Assets. As mentioned above, in addition to the cash asset limitations, a person may own some items that are completely exempt from Public Assistance consideration. In other words, they may own these items in addition to the $5,219 described above, no matter what the individual cost of these items. These items are: 1) Grave Space/Opening & Closing 2) Casket 3) Headstone 4) Vault In summary, a person may have a Funeral Trust of up to $5,219 and also own their grave, headstone, casket, and vault at whatever cost through the funeral trust. Therefore, it is now possible for a person to completely pay for their entire funeral in advance and still be eligible to receive assistance from Public Assistance. Areas of Funeral Expense. Today, the total funeral cost represents the sum of the following four areas of expense: 1) Miscellaneous expenses such as clergy, flowers, etc. 2) Funeral services selected 3) Casket selected 4) Vault selected In working with Public Aid regulations, the above areas directly correspond with their guidelines thereby making it a relatively simple process to complete a funeral pre-arrangement in anticipation of assistance. Basically, the expenses that fall into the Miscellaneous and Funeral Services category are placed in a Funeral Trust Agreement within the $5,219 limitation. The following example should prove helpful: Example. Mr. X is currently in a nursing home and has been paying for his own care. He has $11,500 left and in 3 months will have to seek assistance from Public Aid. Through consultation with his funeral home, the following is completed. * A IRREVOCABLE FUNERAL TRUST covering Misc. and Funeral Services expenses is established in the amount of    $4,300. * A Casket costing $4,000 and a Vault costing $1,700 is selected & added to the trust. * After paying for the above items, Mr. X Has $1,500 left in cash. Mr. X is immediately eligible for assistance from Public Aid. Why? He has a Funeral Trust in the amount of $10,000 and cash in the amount of $1,500 for a total of $11,500. The $1,500 he has left in cash is under the $2,000 cash limitation for Public Assistance Eligibility. Also, the Non-exempt assets of $4,300 is under the $4,502 limitation and the Casket and Vault which cost $5,700 are completely exempt from Public Assistance Consideration, no matter what their cost. Summary. Public Aid may not be something we like to think about, but all too often it becomes a fact of life which we must deal with. Longer life expectancy coupled with the cost of skilled nursing care can exhaust a person’s seemingly secure financial resources. Many people find that it makes perfect sense to pre-pay the necessary Funeral Pre-Arrangements while funds are still available. A WORD ABOUT INSURANCE Many people still plan for their final funeral expenses by purchasing insurance. This option is certainly still a viable approach to Funeral Pre-planning. It should be noted, however, that the growth of Funeral Pre-planning has resulted in a great increase in burial insurance activity. Direct mailings, newspaper fliers, and other forms of advertisement offering burial insurance plans have become commonplace. Some of these plans claim to be associated with funeral homes and some in fact are. However, before pursuing such a plan, you may wish to check with your funeral director to determine his association with the plan. Also, it is advisable to check with your regular insurance agent to see if they might have the same type of plan available to you. In Summary, many people find insurance as the best way to fund their funeral arrangements. As with anything else you do, Simply make sure you are dealing with a reputable company and are getting what you are paying for.