New Jersey Pre-Paid Funeral Trust Fund
Consumers and funeral directors have confidently trusted the New Jersey Prepaid Funeral Trust Fund™ (NJPFTF) as their vehicle of choice for a consistent, straightforward and dependable way to prefund funerals. Operated by the New Jersey State Funeral Directors Association, Inc. (NJSFDA) and governed by a Board of Trustees, the trust fund was established by and for the members of the NJSFDA in 1981. The NJPFTF was created for the sole purpose of safekeeping consumers’ prepaid funeral monies with the premise of what is good for consumers is good for funeral homes.
Paying for Your Prearranged Funeral
In New Jersey, there are three ways to prepay or prefund a funeral.
1. Establish a prepaid funeral trust fund account:
Your first funding option is to open a prepaid funeral trust account. You can open a revocable or irrevocable account. Trusted money in revocable accounts are 100% refundable on demand by the purchaser and with interest. You may also change the funeral home and the selected funeral services or merchandise at any time without penalty.
Irrevocable trust accounts for SSI/Medicaid and General Assistance recipients are non-refundable and any excess funds after funeral services will revert to the State of New Jersey.
When choosing a funeral trust fund, keep the following in mind:
100% of the principal and interest must accrue to the benefit of the trust fund (less a trustee's fee of a maximum of one percent).
All moneys provided to the trust must be deposited in an FDIC insured bank account.
Most New Jersey funeral directors use the New Jersey Prepaid Funeral Trust Fund™ (NJPFTF), also known as CHOICES. It is a secure pooled trust that takes the hassle out of funding either revocable or irrevocable arrangements. However, there are other products available.
2. Assign existing life insurance policy or policies to the funeral home:
A funeral can be prepaid using the proceeds from an insurance policy. If prudent to do so, a person can cash out the value of the policy and place it in a funeral trust fund to cover the costs of a prearrangement. If cashing out the policy is not a prudent option for the individual, the funeral home can complete a revocable or irrevocable insurance assignment on the proceeds of the policy. To do this, the funeral home is named as the policy's owner. The policy's proceeds are then either revocably or irrevocably assigned to the funeral home to be used as payment for all funeral costs at the time of death.
In the case of an irrevocable absolute assignment, the Treasurer-State of New Jersey is named primary beneficiary on the policy, thus allowing any and all funds remaining after the funeral bills are paid to go to the state, as required by New Jersey's mandatory asset recovery law. With revocable insurance assignments, any remaining monies after the funeral bill is paid will be returned to the primary beneficiary.
