A funeral trust, or qualified funeral trust, is a special financial vehicle that allows you to set aside money for anticipated funeral costs. Trusts are a great alternative to insurance.
When you establish a trust, you make arrangements with a cemetery or funeral home to provide services upon death. The beneficiary of the trust is the funeral service provider. Funeral trusts are commonly used to finance preneed contracts.
The money is held “in trust” by a bank, trust company or independent trustee. It will earn income over the years until it is needed, which will be used to offset any increase in the cost for your arrangements.
You will pay the prearranged contract price which then gets invested in a vehicle that complies with Ontario Legislation at an interest rate that will cover the cost of providing your service at the time of need.
Trust funds are invested into individual accounts in the name of the beneficiary (the person for whom the funeral is for).