What to Do When a Funeral Home Goes out of Business
One of the biggest warnings against pre-paying for a funeral is what happens if the funeral home goes out of business. The entire point of pre-arrangement is that you can solidify your funeral plans ahead of time, leaving you worry-free and able to spend your money however you wish. So, the idea that a funeral home might someday terminate services and leave you holding a useless contract is one that may be understandably frightening.
Fortunately, there are steps you can take to ensure your contract is either filled at another funeral home or converted into a settlement.
- Wait a few months. In almost all cases, a funeral home does not close—it simply changes ownership. Before you panic about the state of your pre-plans, wait to see if another owner takes over the facility and all its assets. Your pre-plans are likely to shift over to the new company without a hitch.
- Read your contract. Every funeral pre-plan contract is different, so now is a good time to go over the fine print again (or have a lawyer do it for you). Ideally, the money will have been placed in a trust or guaranty fund that the funeral home was legally required to leave in place against just such a situation. In these cases, you can take steps to recover the funds by accessing the trust or by switching it over to another funeral home.
- Discover if the funeral home was a licensed seller. Although the best time to do this is before you buy a funeral pre-plan package, you should check with local authorities to ensure the funeral home was licensed and authorized to operate within your state. If this is the situation, the state’s treasury may be liable to repay part or all of your investment.
- Become a creditor. When a company files for Chapter 13 bankruptcy, all of its creditors (the companies and people it owes money to) have a chance at recovering a percentage of their funds. You will most likely need a lawyer to help you negotiate the process, or check with your state bankruptcy court to see if there are proof of claims forms you can fill out.
- Talk to area funeral homes. In most cases, rival funeral homes are not going to be able to help you recover your money, but you might be surprised. Some funeral homes are willing to honor these contracts (even though they won’t ever see a penny of the funds you paid in) because they care about the community and want to ensure that people feel confident about pre-planning funerals in the future.
Above all else, try not to panic. It may take a few months for the dust to settle after a funeral home goes out of business, but because these facilities are so heavily regulated and such an integral part of the community, there should be authorities and officials willing to help you through the process.
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