Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, May 1, 1990 TAG: 9005010016
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: MAG POFF BUSINESS WRITER
DATELINE: LENGTH: Long
Nowhere does his wide-ranging book touch a matter that is still largely taboo: the purchase of funeral services.
The decision, when it is made at the time of immediate need, is settled under the greatest emotional and deadline pressure.
That explains a growing trend toward advance arrangements that funeral directors call pre-need.
Regardless of when the arrangements are made, buying a funeral service represents a major outlay.
Lawrence Hamlar, president of Hamlar Curtis Funeral Home in Roanoke, said the average cost is about $3,400.
Minimum for a traditional funeral, Hamlar said, is about $2,400.
While there's no limit to the frills that can drive up the cost, Hamlar estimated the high side at $4,800 to $5,200.
Grant E. Bryant, who has run a funeral service at Elliston for 34 years, said his typical bill is $3,500.
The range, however, is $3,000 to $7,000. That's above the national average, Bryant said, probably because longtime residents want a nice casket and a nice vault.
Bryant's price includes digging a grave at the community cemetery. In the Roanoke Valley, that's a separate charge.
At Oakey Funeral Service, for example, the average falls into the range of $4,500 to $5,500.
Non-traditional services can cost a lot less.
The price list at Oakey Funeral Service shows slightly more than $1,000 for direct cremation and about $1,500 for an immediate burial.
It also suggests the huge range of possibilities with caskets alone costing from $790 to $7,800 and outer burial containers starting at $390 and ending at $7,500.
A printed list is not unique to Oakey.
State law requires all funeral directors to give clients both a written general price list and a written itemized statement of charges.
The code says the price list must be handed to any individual who inquires in person about arrangements or prices. The law specifies that it must be produced at the beginning of the discussion.
A state mandate for specific items to be shown separately resulted in Oakey's list running two legal-size pages.
The Virginia legislature passed another law last year governing pre-need arrangements. It covers such contracts in detail, including handling of the funds.
Hamlar, like most other Virginia funeral directors, was happy to see the law enacted. He said it allowed him to get out of the business of handling trust funds, turning the job over to professional money managers.
Bryant of Elliston likes it too. He said that, as with cremation, pre-need arrangements are growing in use.
Lorraine Cunningham, who has been with Oakey Funeral Service for 10 years, took over pre-need arrangements as a separate job three years ago.
She estimated that 65 percent of Oakey's funerals today are prepaid, although sometimes that's done only a few days in advance.
The average age of a pre-need client is 72, she said, but she's worked with people aged 20 through 90. Many are in the 30-50 age bracket. Cunningham said most clients make advance arrangements to spare their families that burden.
From a financial viewpoint, however, it allows unhurried study of the options and a guarantee that resources will cover the cost.
Cunningham said Medicaid allows nursing home patients to spend some of their resources on funeral planning. That ensures money will be available.
As with cars and other items, Cunningham said, the cost of funeral services has doubled every 10 to 12 years because of inflation.
It's not unusual, she said, for someone to have life insurance of $2,000, which seemed a handsome sum when the policy was purchased 40 years ago.
Pre-need arrangements are made at today's prices, she explained, and the money is set aside in a trust account for the client's benefit.
Interest goes into the account held by a separate trustee. The funeral director, not the client, assumes the risk of whether interest earnings will keep pace with the rising cost.
In such planning, however, the client must pay the cost in cash. Trustees don't accept assignment of life insurance, so the policy proceeds all go to the family.
The pre-need money is invested in either a life insurance policy or an irrevocable trust account at a bank.
Anyone who plans to make installment payments is assigned to a life insurance company. A bank trust account must be fully funded up front.
An irrevocable trust cannot be changed, but the arrangement exempts its beneficiary (the client) from paying taxes on the interest.
Virtually all Virginia funeral directors use Chesapeake National Bank in Saluda, which has made a specialty of qualifying as a pre-need trustee.
Cunningham said anyone planning a funeral should deal with a licensed funeral director. She said some sales people act as a middle party, brokering funerals for their customers at an extra charge.
She said it's also important to buy a contract with complete itemization showing the exact items that the guarantee covers.
Those who don't plan beforehand usually finance the funeral from life insurance.
Cunningham and Hamlar said they seldom find clients with burial policies designed to pay only funeral costs.
by CNB