A pre-arranged funeral or cremation is usually paid for in advance, with the entire balance used to initiate a funeral trust account in a local bank or in Pre-Plan, Inc. (a division of Funeral Director Support Services, Inc.) Because of the use of this third party (the bank or Pre-Plan), the funeral home cannot access any part of this trust account until Pre-Plan or the bank is supplied with a certified death certificate copy. Pre-arranged funerals or cremations may be cancelled, and the trust account returned in total, at any time, if it was set up as revocable. The creation of the funeral trust account usually occurs at the time pre-arrangements are finalized.
Important Note: Contrary to the common practice of other funeral firms, at C. Johann & Sons, Inc. we guarantee that interest accrued will cover any and all inflation-generated funeral expenses. Families are never asked to "pay" for inflationary increases if a funeral has been established as pre-paid in total prior to the date of death. Such costs are absorbed as operating expenses by this firm.
Why We Use Pre-Plan
How Pre-Plan Works
How Pre-Plan is Administered
A Pre-Plan account is opened and your money is deposited on the exact day the Pre-Plan offices receive your contract, social security information, and payment. Your account then begins earning the highest rate of interest in the Pre-Plan's time deposit, pooled investment. The current rate averages over 5%. Interest will vary with money market and CD rates. Funds are placed in FDIC insured bank deposit accounts, CD's in a bank within the state of New York and other investments permitted by law.
Annually, you will receive a summary statement of the principle and interest, along with the IRS required K-1 Grantor Tax Letter for your individual tax reporting. (Interest income is reportable if you are required to file with the IRS).
What if you are applying for SSI/Medicaid assistance?
If you or someone in your family will be applying for assistance under SSI or Medicaid, New York State mandates that all contracts for pre-funded funerals executed by applicants for or recipients of Medicaid be irrevocable. Federal and State law provide that properly trusted (irrevocable) assets intended for the payment of funeral expenses will not be considered as a resource when eligibility is determined. Setting aside monies for burial expenses is now extremely simplified. Contact us for further information.
More about Pre-Plan
Administered by the state trade association for funeral directors, Pre-Plan offers both revocable and irrevocable accounts. Each revocable account in the Pre-Plan is, at all times, totally refundable to the Purchaser with interest and without penalty. Irrevocable accounts are set up for applicants for or recipients of SSI/Medicare and must be non-refundable to comply with Chapter 660 of New York State Law. Most pre-arrangements are now being set up as irrevocable.