The rising problem of funeral poverty
Recent research shows, in the last year, funeral costs across the UK have increased by 4.9% and continue to be a major source of financial hardship for those who are struggling with the loss of a loved one.
Across Britain, in the last ten years these costs have now increased by up to 70%, with London being the most expensive place to die according to new research by Citizen Advice, with average costs now being £5,951.
In the rest of the UK, that figure, is lower at £4,078.
However, Scotland has the lowest costs, with the average only being £3,601; but still up from the £1,945 it was in 2004. Recent research by Citizen Advice Scotland shows in the last 13 years, that increase is almost double what we saw in relation to house price and wages increases.
John Birrell, chairman of the Scottish Working Group on Funeral Poverty, which represents nearly 20 organisations and campaigns against funeral poverty, has put the reason for the increases down to increasing burial and cremation costs, coupled with the rising costs of funeral directors.
He has said “Our basic concern has been both the increase in the costs, and the challenge that presents to people on lower income, those on benefits and the working poor.
“When confronted with the death of a loved one, you need to have the disposable funds to deal with cost.
“Many people would be challenged by that, but if you’re already facing poverty or on the brink with that kind of cost, then you’re pushed over into unsustainable debt.”
Are there any solutions?
The problem with the loss of loved one, is in the immediate aftermath of someone dying, you must start arranging the funeral. You are probably not going to be thinking correctly. You are probably going to be feeling vulnerable. Haggling and negotiating with the funeral director, over prices, is not what you want to do.
However, the cost is important at this stage. How will they be met?
The cost of a funeral can always be recovered from someone’s estate, but only if that person’s estate has sufficient value to cover that cost. Whether an estate has any value will depend on whether the person had any savings, or a house with equity that can be sold, or possibly life insurance policies or investments. Thankfully where such assets are available, they can be used to pay for funeral costs, even before the deceased person’s debts are paid, although it can take months for funds to become available.
In the meantime, the funeral director is likely to want £5-600 up front as a deposit. For many who are having to organise a funeral and are experiencing financial difficulties, this can be a major obstacle. It often means borrowing from high cost lenders or family members and friends.
Keep on top of the costs
However, there are thing you can do to help the situation. First is keep on top of the costs . It is not always necessary to have the most expensive funeral and there are options available. You can ask the funeral director to put together a package that will be affordable. However, there are some basic steps you should take if you are the person responsible for arranging a funeral.
The first is establish whether the person that passed away had any savings in their bank accounts. If they did, the bank may be willing to make an early payment towards the funeral costs from the account. They will want proof that you are the person that the deceased wanted to arrange the funeral or should be arranging it, such as seeing the will or evidence that you are a family member or friend. They will also want to see evidence of the costs of the funeral, such as a statement or bill from the funeral director.
Secondly, it is important to establish whether the person who passed away had any life insurance or funeral plans. If they did, it may be possible the cost can be recovered from these shortly afterwards.
Otherwise, it may be necessary to wait for the sale of a home or other asset, as part of the winding up of the estate, which can mean it may take some time before funds are available to cover the costs.
However, where immediate costs need to be met, such as to pay a deposit, unless you have the disposable funds available, you will need to consider how you will access them. It may be necessary for you to borrow the money. Where you do, alternatives to high cost borrowing should be considered.
If you are in receipt of certain, means tested benefits, you may be able to apply for a budgeting loan, or if you are on Universal Credit, a budgeting advance. This could help with some of the immediate funeral costs, such as paying the deposit.
Alternatively, if you are a member of a credit union, you may be able to obtain a small loan from them.
Paying for the Funeral itself
If the person’s estate is not likely to cover the costs of paying for the funeral, then you need to consider how you will pay for the costs, as if you organise it, you are responsible for paying the bill.
Where you cannot afford this, you may be able to get some help by applying for a Funeral Payment from the Department of Works and Pensions, but only if you are in receipt of certain qualifying benefits. These do, however, include in-work benefits, such as housing benefit and universal credit.
If you are not, there may be other solutions.
Some funeral directors may allow you to pay up the remaining balance by instalments, after the initial deposit is paid. However, where you already have other financial commitments you will need to consider whether this is affordable for you. Therefore, considering the cost at the outset is important.
You may also be affected further with the funeral debt, if you were financially dependent on the person that passed away for support or had joint financial commitments with them. That support may no longer be available and those financial commitments may now be yours.
It is for reasons like this, that advice agencies like Citizen Advice are now talking about funeral poverty and unlike in the past, where the costs were lower and families were larger, increasingly the burden is now greater and is falling on a smaller number of shoulders.
It is not, therefore, surprising that for many people who suffer a bereavement and with it a change in circumstances, often the solution is to look at informal and formal debt remedies, such as the Debt Arrangement Scheme, in Scotland, and Debt Management Plans across the rest of the UK. If it is appropriate, it may even mean an Individual Voluntary Arrangement, Protected Trust Deed or bankruptcy.
If you need more information about the options available to you in dealing with your debt, you can always speak confidentially with one of our friendly advisors on 0808 2085 198.