A trust based prepaid funeral plan lets you arrange and pay for your funeral services in advance. Paying for your funeral this way means you pay for your funeral services at today’s prices, avoid future inflation if costs rise and remove some of the pressure of arranging a funeral from your family.
The money you pay for this type of funeral plan is held in a trust fund until it is required. Hence the name ‘trust based funeral plan’.
How does this type of funeral plan work?
With a trust based funeral plan you choose the services you want based on your requirements. Typically, this will include the services of a local funeral director, use of the chapel of rest, the hearse, coffin, the service and either the cremation or burial fees. More comprehensive funeral plans may also include a better quality coffin and cars for the family.
You can choose to pay for your plan in one go or by monthly instalments. Your money is held responsibly in a trust fund until it’s required to pay for your funeral service. Trust funds are usually separate entities to the company providing the plan, managed by trustees in line with the Financial Services and Markets Act 2000.
When the time comes, the funeral director will carry out the guaranteed services included in the plan with nothing more to pay.
What is a trust based direct cremation plan?
A trust based direct cremation plan works in a similar way to a traditional prepaid plan, the difference being that a direct cremation is a simple cremation without a funeral service. With this type of plan there is no hearse or limousines, no use of the chapel of rest and no service at the crematorium. Just a simple unattended cremation, after which the ashes are either scattered at the garden of remembrance or handed back to family.
As a result, trust based direct cremation plans are much cheaper compared to traditional funeral plans.
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Are trust based funeral plans regulated?
Since July 2022, all prepaid funeral plan providers operating in the UK have been required to be authorised and regulated by the Financial Conduct Authority (FCA), or operate as an appointed representative of an authorised firm.
This regulation was introduced to improve standards across the funeral planning industry and provide greater protection for consumers. Before FCA regulation, funeral plans were largely self-regulated, which led to concerns about how some providers operated and how customer money was protected.
Today, FCA-regulated providers must meet strict requirements relating to governance, customer communications, financial management and the fair treatment of customers. This helps ensure that consumers receive clear information about the plans they are buying and understand what is and isn't included.
Being regulated by the FCA also means customers have access to the Financial Ombudsman Service if they have a complaint that cannot be resolved directly with the provider. Depending on the circumstances and the structure of the plan, consumers may also benefit from protection through the Financial Services Compensation Scheme (FSCS).
For many consumers, FCA regulation provides additional confidence when choosing a funeral plan provider.
How can I pay for a trust based prepaid funeral plan?
You can pay for a trust based plan either in one go or by monthly instalments. Paying in one go is the cheaper option as instalment plans incur additional fees. Having said that, many plan providers let you spread your costs over 12 months at no extra cost.
What other types of funeral plan are there?
In addition to a trust based funeral plan, insurance based plans are also available. The services offered will be similar to a trust based plan, it is just the way your money is held that is different.
With this option, when you buy your plan, your money is held securely in a whole of life insurance policy until it is required.
In addition to insurance backed prepaid funeral plans, you can also get over 50 life insurance which is often used to help with funeral costs. With an over 50 plan, a cash sum is paid out when you die that your family can use however they wish. So, you are not paying for a specific set of services as you are with a funeral plan, just a guaranteed sum of money that can be used to help with costs when the time comes.
What Are the Benefits of a Trust Based Funeral Plan?
Trust based funeral plans remain one of the most common ways to pay for a funeral in advance. They offer a number of potential benefits for people who want to organise their funeral arrangements ahead of time.
One of the biggest advantages is that the cost of the funeral services included in the plan is secured when the plan is purchased. As funeral costs have generally increased over time, many people like the certainty of knowing that key funeral director services have already been paid for.
Another benefit is that funds are held separately from the funeral plan provider. The money paid into the trust is managed independently by trustees whose role is to oversee the fund and ensure it is operated in the interests of plan holders. This separation provides an additional level of protection and helps ensure funds remain available when they are needed.
Many people also value the practical benefits of having arrangements in place. A funeral plan can reduce the number of decisions loved ones need to make at what is often a difficult and emotional time. By recording your preferences in advance, family members can feel more confident that they are carrying out your wishes.
For those concerned about leaving funeral costs to their family, a prepaid plan can also provide reassurance that the major expenses have already been taken care of. This can be particularly important for people who live alone, have limited savings or simply want to ensure their loved ones face fewer financial pressures in the future.
Which companies offer trust based funeral plans?
If you want to learn more about which companies offer trust based plans, you can read our funeral plan reviews on our sister website Over50choices. Just click on the company you want to know more about:
| Funeral plan provider | FCA Regulated | National or Regional |
|---|---|---|
| Avalon Funeral Plans |  | National |
| Celebration of Life |  | National |
| Coop Funeral Plans |  | National |
| Crystal Cremations |  | National |
| Dignity Funerals |  | National |
| Distinct Cremations |  | National |
| Ecclesiastical Planning Services |  | National |
| Golden Charter Funeral Plans |  | National |
| Golden Leaves Funeral Plans |  | National |
| Memoria (Affordable Funerals) |  | National |
| Open Prepaid Funerals |  | National |
| Plan with Grace |  | National |
| Pure Cremation |  | National |
| Choice (Funeral Partners) |  | Regional |
| Central England Co-op |  | Regional |
| F A Albin & Sons |  | Regional |
| Family Funerals Trust |  | Regional |
| Freeman Brothers |  | Regional |
| Haven Personal Funeral Plans |  | Regional |
| Independent Funeral Plans |  | Regional |
| Peace Funerals |  | Regional |
| Southern Co-op |  | Regional |
| Fosters Funeral Directors |  | Regional |
| William Alty Funeral Services |  | Regional |
To find out more about the different insurance backed options available, read our simply guide to funeral cover.
What Happens to the Money in a Funeral Plan Trust?
When you purchase a trust based funeral plan, your payments are placed into a dedicated trust fund rather than being used as part of the funeral plan provider's day-to-day business operations.
The trust fund is managed by independent trustees who have a legal responsibility to oversee the assets within the fund. Their role is to ensure the trust has sufficient resources available to meet future funeral costs for plan holders.
The money held within the trust may be invested over time to help the fund grow and keep pace with inflation and rising funeral costs. Investment decisions are made by professional fund managers in accordance with the trust's objectives and regulatory requirements.
When a plan holder passes away, the trust releases the appropriate funds so that the funeral services covered by the plan can be provided. The exact arrangements vary between providers, but the overall purpose remains the same: ensuring money is available to pay for the promised funeral services when required.
Because the funds are held separately from the funeral plan provider, trust based plans have traditionally been seen as a secure way of protecting customer payments. However, consumers should still check that any provider they are considering is FCA regulated and understand exactly how their chosen plan operates.
Trust Based vs Insurance Based Funeral Plans
When comparing funeral plans, you may come across both trust based and insurance based options. The funeral services provided can be very similar, but the way the money is held differs.
With a trust based funeral plan, payments are placed into a trust fund that is overseen by trustees on behalf of plan holders. The trust exists specifically to meet future funeral costs.
With an insurance based funeral plan, payments are used to purchase a whole-of-life insurance policy. The policy proceeds are then used to fund the funeral services when the plan is needed.
For most consumers, the practical differences are less important than choosing a reputable provider and understanding exactly what is included within the plan. Since FCA regulation was introduced for prepaid funeral plans, both trust based and insurance based providers must meet strict standards designed to protect customers.
Whether a trust based or insurance based funeral plan is more suitable will depend on the provider, the plan features and your personal preferences. In either case, it is important to compare costs, review the terms and conditions and ensure you understand any exclusions before purchasing.