Meeting the costs of a funeral

Who is liable for paying?

The instruction to a funeral director to take charge of a funeral is a personal contract. The person authorising the funeral, therefore, may be personally liable for the costs of the funeral (usually there is provision in wills that covers the payment of funeral expenses, however, if the estate does not have the money to cover the debt, the contractor will be liable).

Most banks will release part of the deceased’s money to meet funeral expenses.

A person who is merely assisting the family of the deceased and does not wish to be personally liable for costs may be protected by obtaining a written indemnity for costs from an adult who is a close relative or beneficiary of the deceased before instructing a funeral director.

In the case where someone dies without friends, relatives or funds to cover burial expenses, the costs will be borne by the state.

The trustees of any public cemetery upon the order of a magistrate or coroner must bury, or may permit, the remains of a poor person to be buried in their cemetery free of any charge. Before making any order, the magistrate or coroner must be satisfied that the deceased person died without the means to pay for the burial and does not have friends who can pay. The magistrate or coroner must also specify that the body be cremated, unless satisfied that the deceased person’s views on cremation are unknown, or cremation is contrary to the wishes or beliefs of the deceased, or it is not practicable to cremate the body (see pt 10 ss 142–145 C&C Act).

Pre-payment of funerals with funeral directors is becoming a more popular means of paying for a funeral in Victoria. The pre-payment is often in the form of an insurance bond. However, it is also possible to arrange insurance that will cover funeral costs.

Benefits available

Pensioners

The Social Security Act 1991 (Cth) (“SSA”) provides a bereavement benefit to recipients of Commonwealth pensions to assist these pensioners in meeting the extra costs brought about by the death.

The benefits established by division 9 of SSA, sections 82–91 inclusive and sections 21 and 315, are:

A surviving spouse (including a de facto spouse) will receive a temporary supplementary pension, after the death of the spouse, of a lump sum that is equal to seven times the difference between the amount of the single pension and the amount of the married pension received by the couple. This benefit will be payable even if the surviving spouse is not entitled to the single pension in their own right.

A single pensioner’s estate will receive one fortnightly payment of pension to the estate or other person nominated by the Department of Social Security.

Repatriation allowance

The Veterans Affairs Department provides a benefit of up to $2,000 towards the funeral expenses of an ex-serviceman who dies of war-related causes, in the circumstances set out in sections 98B and 99 of the Veterans’ Entitlements Act 1986 (Cth) (“VE Act”). These circumstances are situations where the pensioner dies in an institution, while proceeding to or from an institution, or after being discharged while terminally ill from an institution.

In certain circumstances, a grant of up to $2,000 may also be made towards the funeral expenses of a married serviceman’s widow or child, or an unmarried ex-serviceman’s widowed mother or widowed step-mother (s 100 VE Act).

Other benefits

An allowable deduction of $100 from personal income tax is provided by the Australian Taxation Office where the deceased was a dependant of the taxpayer and where the total concessional expenditure of the claimant was in excess of $1,590. Other possible sources of funeral benefits may be life insurance, health funds, workers compensation, social clubs, funeral funds and superannuation schemes.