You can expect to feel a lot of emotions while planning a funeral. One you may not expect is confusion. This glossary of death terms can help make the best decisions.
Alkaline hydrolysis: A form of cremation by liquid, instead of fire. Bodies are stripped of flesh leaving behind only ashes. Like a typical cremation, families can take the ashes with them. Currently, only 15 states have legalized this process. It costs about $2,000 to $4,000.
Burial: The most traditional and expensive funeral. On average, burial now costs between $7,000 and $12,000. Because burial involves dangerous chemicals and high costs, more Americans have shifted away from this type of funeral.
Cremation: A process of breaking down human remains to ash. It’s typically done by fire, but newer trends using water and chemicals have been popularized in recent years. Cremation is now the most popular funeral service in the United States because it’s a cheaper alternative to traditional burial. The average cost for cremation is just under $7,000. However, that number varies depending on the state and whether a family opts for other funeral home services.
Durable power of attorney: Keeps someone on as power of attorney when they’re incapacitated. This is for someone who has potentially been hospitalized and has suffered brain damage or shouldn’t make financial decisions after. All power of attorney contracts are considered durable.
Estate plan: This is an umbrella term for everything to control your debt after death. You can limit what your family owes when you die by planning today. In a nutshell, an estate plan is a legal instruction to divvy up your money and possessions after you die or become incapacitated. The term does encompass more. For parents, the estate plan outlines who will be the legal guardian of their children.
Executor: The person you (the testator) appoint in charge of your estate. They must be outlined in your last will and testament. If not, the court will through probate. It’s the executor’s job to ensure all instructions in the estate plan are met and pay all your debts.
Fiduciary: This term is only used when someone creates a Power of Attorney. A fiduciary is appointed in charge of financial decisions for that person if/when they become sick or injured. A fiduciary’s role goes further than an executor. Where the responsibilities of an executor go into effect only after the grantor’s death, a fiduciary’s duties become effective immediately after signing the document. The person is legally required to “act in the best interests” of the individual who granted them Power of Attorney.
Funeral loan: Personal loans for grieving families who can’t afford funeral costs. They’re lent through banks but offered by funeral homes. These loans are often offered as an alternative to high-interest credit cards. But like credit cards, there are pitfalls to watch out for. Grieving families should only borrow what they can afford to pay back. Interest rates will also vary based on the borrower’s credit score. Lenders offer funeral loans amounting anywhere from $1,500 to $40,000, with 6.99% – 35.99% APR rates.
Living trust: Trusts differentiate from wills mainly because a trust goes into effect as soon as it’s signed. It’s a legal arrangement where you (the grantor) appoint someone (a trustee) to manage your finances on your behalf.
Living will: A legal document that states who and what will receive your money and possessions once you die. Unlike other estate planning documents, a will only goes into effect once the person who made it (the testator) dies.
Limited power of attorney: Document that temporarily appoints someone in charge of your finances. That person and timeframe are appointed by you. One example: You’re out of town while closing on the sale of your house. An estate planning attorney can draft and file a temporary power of attorney for someone to oversee that sale while you’re away.
Power of attorney: Document that gives someone legal authority to pay your bills when you can’t. That’s someone you appoint. A POA gives them access to all of your financial accounts and property.
Probate: The legal process that administers and validates a deceased person’s will. This is commonly referred to as “expensive, difficult, and lengthy,” especially when involving a deceased person without a will. The most basic of estate planning starts by “writing a plan” for where your assets go when you’re dead. That “plan” is called a will. In your will, you appoint someone in charge of ensuring those wishes would happen. It makes the legal process, and probate, cheaper and easier. Without a will, no one is in charge and the courts have to figure it out. That makes it tougher to deal with and more expensive.
Testator: A deceased person with a will. Essentially you are the testator once you start writing a last will and testament. It’s not a common term but will come up often in estate planning legal documents.
Published by Debt.com, LLC