Savings up to $10,000 with the Funeral Trust are excluded from government asset testing.
Organising and paying for a funeral is a difficult task during an emotional time, but there are steps that can be taken to smooth the process for loved ones.
Warkworth’s Jason Morrison Funeral Services recommends the Funeral Directors Association of New Zealand’s fees-free “Funeral Trust” which allows people to record their funeral wishes and set aside money for it.
The minimum deposit is $200 and the minimum weekly payment is $10 a week. Funds can also be withdrawn at any time, even before death, 21 days after an application is made.
Alternatively, there is funeral insurance and life insurance, but Jason cautions that it is important to ensure a policy will meet one’s needs if circumstances change.
He says that with some policies, no cover is paid out if for any reason payments are no longer made.
“I have heard of people who have started paying funeral insurance premiums only to find later that they could no longer afford to keep paying and have lost all that they paid and received nothing in the end.”
Without any financial safety net in place for a funeral, it is possible that it can be paid for out of an estate, but the process may be less straightforward.
In most cases, a bank will pay an invoice for a funeral bill when presented with a death certificate, but only if there is less than $15,000 in the deceased’s bank account.
Different rules come into play for higher sums, and will likely require an application to the High Court in Wellington.
Where the deceased has a will, the executor can apply for the right of probate with the High Court in Wellington. Where there is no will, a family member can apply for letters of administration.
For either application, the Court will likely take four to six weeks, which may not provide enough time to pay a funeral director’s bill within the agreed timeframe.
Work and Income New Zealand may pay a funeral grant of up to $2150 if a funeral bill exceeds the value of the deceased person’s estate – but only if the applicant earns less than between $30,700 and $39,000 annually, depending on if they have children.
Jason says the most helpful thing a person can do is take the time to prepare by talking to the Funeral Directors Association to make plans that can meet the need of family members.
“A funeral doesn’t have to be rushed or hurried, it can be tailored to reflect the life that has been lived.”