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Avoid confusion, financial burden of your funeral with a trust p2

We are continuing our discussion of funeral trusts. The concept is fairly straightforward: Set aside money to pay for funeral and burial expenses. There are subtleties, though, that deserve a little more attention.

Our scenario is about a Houston couple, Bob and Judy. Bob has included specific instructions for his funeral in his will. Judy has taken her planning a step further by setting up a trust. When we left off, we were talking about where that money would come from.

The money in the trust is coming from two sources in Judy's case, but there are almost limitless options for funding a funeral trust. Judy has purchased a life insurance policy and made the trust the beneficiary. When she dies, the insurance proceeds will move into the trust, escaping taxes and creditors alike. Also, when she started the trust, she deposited a small inheritance from an aunt in hopes it would grow over time.

Judy has asked her best friend to be the trustee. The two women have shared a lot, and Judy is certain that her friend will be able to manage the trust with integrity, even if there is little management to do. Judy is an older woman, and she has made all the arrangements with the funeral home and the musicians already. The trust will pay them directly without having to bother the trustee.

If there is money left over after the funeral and the dinner have been taken care of, Judy has included a provision that those funds be donated to her church. The trust documents lay it all out so there are no questions and no worries for her loved ones.

Source: ProducersWeb.com, "Funeral trusts: Help clients plan and pay for their funerals while they're alive," Christopher P. Hill, Jan. 13, 2014

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