Pre-Plan & Prepay

Why Is Planning Ahead a Good Idea?

Pre-planning can save your family and friends from having to make many difficult decisions during a very difficult time. Planning ahead also gives you a say in your own arrangements, assessing and comparing your options and may help reduce or eliminate the financial burden on your family.

It’s important to discuss your final wishes with your family members, friends or your estate trustee as the person named in your Will to handle your affairs can change your plans at the time of your death.

Contract Requirements

Your contract must include the following information:

  1. The name of the person who is paying for the contract (the purchaser).
  2. The name of the person for whom the services or supplies will be provided (the recipient).
  3. The name of the company you are dealing with (the provider).
  4. The services and supplies you have chosen.
  5. The contract terms, including your right to cancel.
  6. A description of any commission or benefits that your provider is receiving for recommending you certain supplies or services.
  7. Any taxes to be paid.

If you have chosen to purchase interment or scattering rights, your contact must include either:

  1. A description of the location of the grave, crypt or niche for interment; or,
  2. The location where you may scatter cremated human remains.

You can pre-plan your final arrangements without prepaying. Most service Providers will keep a record of your plans without cost. 

Should you choose to preplan AND prepay, you will be asked to sign a contract. 

There are two ways to prepay:

  1. You can pay your Provider and have the money held “in trust” by a bank, trust company or independent trustee. This money will earn income over the years until it is needed, which will be used to offset any increase in the cost for your arrangements.
  2. You can purchase insurance from an insurance company. Your Provider may have an insurance program in place.

Ontario law protects your prepaid money in several ways:

  1. When you prepay, your Provider must give you a contract that states the total amount of money you have paid to date and the terms of payment for any balance you owe.
  2. If you have prepaid with a funeral establishment for funeral supplies and services, or a transfer service for transfer supplies and services, your money is protected by a compensation fund which is used to return money to consumers if, in rare cases, their prepaid money is not available when needed. The fund will cover losses only if you prepaid with a licensed funeral establishment or transfer service.
  3. The Provider is required by law to choose only safe investments for prepaid trust funds.
  4. You are entitled to ask your Provider at least once each year where and how the money is invested and how much money you have in your trust account.
  5. If you buy an insurance policy to fund your pre-arranged contract, you will pay the insurance company directly. Your money is protected under the Insurance Act

You can purchase insurance from an insurance company. Your Provider ay have an insurance program in place. With this option, you should buy enough insurance to cover the supplies or services at the time of need. The insurance company will then pay the Provider at the time of your death. If you purchase insurance directly from an insurance company, you will still need to have a contract in place with a Provider to have the insurance policy assigned directly to them.

If you purchase insurance, you will have to sign two (2) contracts.

An insurance contract with an insurance company and a prepaid contract with your Provider.

This will ensure that the insurance money is used for the supplies and services you choose.

Your insurance contract will set out how you can cancel it, any fees you may have to pay and any rights to a refund that you may have.

If prices go up, the income that your prepayment money earns will be used to offset any increase in costs.

At the time of death, funeral establishments, cemetery and crematorium operators must provide a statement showing either:

  1. How much money an insurance policy will pay for the costs of final arrangements. 
  2. How much money is held in trust (including income earned) and what the services you requested cost at the time they are delivered.

As of July 1, 2012, all prepaid contracts must be guaranteed — meaning that a Provider cannot ask for more money if the cost of delivering supplies and services goes up. 

If you have a prepaid contract that was made on or after July 1, 2012, you will not be asked to pay more for the services or supplies you requested except for any balance that may still be owing under the contract. Any services or supplies that are requested but not to included in your prepaid contract will also need to be paid for.

If you have a prepaid contract made before July 1, 2012, your legal representative may have to pay more money to cover higher prices depending on the terms of your contract.

The cost of the services must be based on the most current price list. if that cost is lower than the amount you prepaid (and the interest earned since you signed the contract), then there will be leftover money.

The answer depends on the date of your contract and the laws that applied at the time the contract was signed.

  1. For cemetery or crematorium contracts signed on or after April 1, 1992, and funeral or transfer service contracts signed on or after June 1, 1990, leftover money will be paid to the estate. The law does not require a refund for contracts entered into before these dates. 
  2. For funeral and transfer service contracts entered into after July 1, 2012, the purchaser can select a person who can receive leftover money.

The Funeral, Burial and Cremation Services Act, 2002 does not require that a refund be made for contracts entered into before these dates. 

You, your legal representative or another person named in the contract may cancel or change your prepaid contract at any time before the supplies or services are provided. You must give the Provider notice in writing.

You may or may not receive all of your money back. 

The following rules apply:

  1. If your money was to be held in trust and you cancel within 30 days of the date you entered into the contract, you will receive a full refund.
  2. After 30 days, you will receive a refund plus any income earned, but the Provider may retain 10% of the amount paid to a maximum of $350. In addition, the Provider is required to refund the income earned or the income that would have been earned on the money had it been deposited as required by law.
  3. With rare exception, the Provider will retain the value of the supplies and services that have been provided prior to cancellation.
  4. Cancellation of a prepaid contract does not necessarily cancel the related insurance policy. Cancellation fees for an insurance policy vary. Before you buy or cancel an insurance policy, you should clearly understand the implications of the insurance company’s cancellation policy.

If you have an Insurance Contract:

You may cancel it as well, however, your refund will depend on the terms of your contract.

Review the contract and speak to your insurance company for details. Your insurance contract may have a cooling-off period and cancellation fees and the amount of a refund will vary.

Remember to keep all important documents in a safe place where your legal representative(s) can find them easily. Give a copy to the person who will likely be making the arrangements. Keep in mind that your representative may not be able to have a safety deposit box open until after the funeral.

At death, your legal representative should take your pre-arrangement documents to your chosen Provider and any receipts or other evidence of payment. The Provider will review the contract with your legal representative and let him or her know if there are any extra costs to be paid at that time.

One of the following could happen:

  1. The Provider can make a reasonable substitute at no extra charge.
  2. Your legal representative can cancel that part of the contract.

If there are any changes or added items, your legal representative must give written authorization and may be asked to sign a new contract.

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