Don’t pay the funeral invoice
One of the frustrating things that often happens to me when I take instructions from an Executor for a new Estate is I find out that somebody has already paid for the funeral, from their own pocket on a credit card. It would seem that on the whole funeral homes are not telling Executors that they can get the funeral invoice paid by within days if they know what they are doing, instead they talk about an ‘early payment discount’ and encourage people to pay it immediately. I know it isn’t all funeral homes, but it happens too often, and almost always when I see this there was an easy way to have the funeral invoice paid in a matter of days.
If you are preparing your Will then it is important that you let your Executor know that they should not pay the funeral invoice themselves.
Approach the bank
The simplest and quickest thing that the Executor can do is walk into a branch of the bank. If the deceased person had money in an account, and somebody walks into a branch of that bank with an invoice for the funeral, then the bank will draw a cheque from the account and pay the funeral home directly.
The bank will not (emphasis, will not) repay the person who paid the invoice. It doesn’t matter how well you ‘prove’ that you paid it. They will only pay the funeral home directly. This is why it is so frustrating that people see me after they have already paid for it.
What if there isn’t much money in the account?
You know what, even better. The reason I say that is the bank will draw a cheque for whatever the balance is, partially pay the funeral invoice, and the Executor has one less asset to distribute, one less set of forms to complete. If you have only just started down the path of being an Executor then you have no idea how much paperwork, delay and bureaucracy you have in your future. Get rid of one account now.
If there is more than enough money in the bank account then fine, you can deal with the balance of that account later.
What if there isn’t any money in the account?
There are a few other options, which you should speak to a solicitor about (and the Estate will pay the Executor’s legal fees) but some suggestions include:
If the person had superannuation you can ask the superannuation company to pay the funeral invoice
If the person died in some way that is attached to insurance (for instance, a car crash) their own insurance policy may pay the funeral invoice
The estate may be eligible for a bereavement payment from Centrelink
If the deceased person is due some sort of leave or other entitlement by their employer, the employer may agree to pay the funeral invoice
All of these institutions are unlikely to repay the person who paid the funeral invoice. This all needs to be done before the Executor has been convinced to pay it on their own credit card.
But the Estate will repay me
Yes, but you are looking at about six months before you get that money. There is a very specific reason that the bank will pay the funeral invoice, by legislation the first debt that the Estate owes is to pay the funeral invoice. This is because when a funeral is being paid you probably don’t have a death certificate or access to any other assets, and the government has an interest in ensuring that funerals go ahead and realises that funerals happen very shortly after death. Therefore as a matter of legislation the assets go there first and the bank can safely pay that debt.
They won’t meddle with third parties though, the bank will not repay the person who paid the funeral. That means the person who paid the funeral is probably waiting for Probate, or if they are lucky just the general administration of the Estate. I used to tell clients that it takes minimum two weeks to get a death certificate in NSW, honestly I don’t know what to tell them anymore but it is longer. Most asset holders won’t talk to you until they have cited the death certificate. This is the beauty of the funeral invoice, they will look at that without the death certificate.
Once you get the death certificate you then have to get many certificate copies and send it to everyone, asking certain questions that you need answered in order to administer the Estate (whether or not you need Probate). I think we can all agree that banks and other large institutions aren’t known for their speedy correspondence.
You will not be repaid any interest
If you have paid the funeral on your credit card the Estate will repay you the debt, but not any interest. That means that the person who paid the funeral invoice is probably left out of pocket.
They will just have to wait
If all of these options don’t work you know what, the funeral home will just have to wait until Probate rather than expecting the Executor to wait. But what about the late payment fee?!
Honestly, it isn’t important.
I struggle to think of many jobs that are more thankless than being an Executor, even as a mother my kids do thank me frequently. People don’t thank the Executor, and there is a ton of unseen work for them to take care of. So the Estate will lose a bit of money to the late fee. This is not the Executor’s fault nor is it the Executor’s responsibility to avoid fees by reaching into their own pocket. They are doing enough, they are doing more than enough.
Also it is important to understand that the Executor is not personally liable for Estate debts, in the same way that they do not get to pocket all of the Estate’s assets. While an Executor may be personally responsible for unnecessary delays, the fact that the Estate’s assets weren’t available to pay the funeral invoice is not the fault of the Executor and does not require the Executor to reach into their own pocket.
Get advice
The other answer of course is that the Executor should get advice, but I appreciate that not everyone can or wants to do that. Share this blog post with them and encourage the Executor to, at the very least, approach the bank first.