Top Ten Tips: Funeral finances

Here's how and why you should plan ahead:

1. Make it personal

If you plan in advance you can choose the venue, the music and the readings that you want, and pick everything - down to the coffin. There's a broad choice with something for everyone, from wool or willow "eco" coffins to metal or solid wood caskets. Prices of coffins range from 500 to 5,000. If you leave your family to choose, they might feel forced to choose something expensive so that they don't look miserly - you can take the choice and the cost, out of their hands.

2. A wee dram

The chance to get together after a funeral for some tea, some cake, maybe a drink - it's an invaluable time for people to share their memories and condolences. You can include money in your pre-planning to cover catering and flowers, a notice in the paper and all the other little things that add up.

3. Putting the money aside

There are different ways of paying for a funeral, from pre-payment plans to monthly payment agreements, with a guaranteed payment when you die. These are essentially insurance plans, not endowment policies, and easier on the wallet initially. However, there is a minimum payment period at the beginning, and if you stop paying into the scheme, you usually do not get any refund. This type of policy can also mean paying much more for your funeral than the actual cost if you live a long time.

4. What you're paying for

As well as the coffin, there are the burial or cremation costs, doctors' certificates, religious or humanist officiants, the preparation and care of the deceased, plus any limousines needed along with the hearse. If you have moved elsewhere in the country, that needs to be managed, too - do you want to be brought "home"? Or would you like another funeral director who is a member of the National Association of Funeral Directors to take care of the arrangements locally?

5. Estate settlement

Anyone who has waited for a deceased estate to be wound up knows how long it can take to be settled. While many people assume their estate will pay for funeral costs, family members often have to pay up-front and then wait months for any inheritance.

6. Fewer savings, better benefits

Many care homes insist on a funeral plan being in place for residents, to avoid having to make decisions on behalf of you and your family. However, this can work in your favour: money spent on your funeral pre-planning will reduce your overall savings level, potentially increasing the care benefits available to you.7. Tax Take

If you haven't paid in advance, note that funeral expenses are deducted from your estate before inheritance tax (IHT) is applied, so your family need not pay tax on that amount. However, if the prepayment plan has over-provided for the funeral costs any excess will become part of your estate and will be subject to IHT.

8. Don't forget the headstone

A headstone can cost 1,000 on top of the funeral and even adding your name to an existing memorial can be expensive. A headstone gives a focus point, a place for people to visit, and your family are likely to feel the need to save for one if you haven't organised this.

9. Extra charges

If you want to be buried somewhere other than the area in which you live, look out for extra fees. Councils have a duty to their own residents, so they often add a surcharge of 50 per cent, or even 100 per cent extra in some cases, for non-residents to be buried. If you need to be buried at the weekend, the costs are higher, too - Sundays and public holidays burials cost almost double. Private cemeteries may also charge an annual maintenance fee.

10. Planning for others

It's not just your own funeral that you can plan for, of course. Elderly parents and relatives might welcome the chance to be involved in planning, or you may just want to be sure you have the funeral paid and arranged in advance, knowing that you will be too upset to manage matters well when the time comes.