Many funeral directors rely solely on two methods of payment for their funeral bill, payment in advance of services or an assignment of a life insurance policy.  This maybe short sighted.

A funeral home can be assured of payment of their funeral bill without one of these methods if some basic due diligence is performed.  If an individual dies with assets that require probate (assets in their individual name), the funeral home can assess the likelihood of payment of its funeral bill with a few short inquiries.

Michigan’s probate code MCL 700.3805 provides for the priority of payment of reasonable funeral and burial expenses. The statute provides that after the payment of exemptions and allowances (assets protected for the surviving spouse and/or minor children), costs and expenses of administration (attorney fees, fiduciary fees, filing fees, etc.), the reasonable funeral and burial expenses shall be paid.

Funeral Payment Statute

The statute provides:

  (1) If the applicable estate property is insufficient to pay all claims and allowances in full, the personal representative shall make payment in the following order of priority:
  (a) Costs and expenses of administration.
  (b) Reasonable funeral and burial expenses.
  (c) Homestead allowance.
  (d) Family allowance.
  (e) Exempt property.
  (f) Debts and taxes with priority under federal law, including, but not limited to, medical assistance payments that are subject to adjustment or recovery from an estate under section 1917 of the social security act, 42 USC 1396p.
  (g) Reasonable and necessary medical and hospital expenses of the decedent’s last illness, including a compensation of persons attending the decedent.
  (h) Debts and taxes with priority under other laws of this state.
  (i) All other claims.
  (2) A preference shall not be given in the payment of a claim over another claim of the same class, and a claim due and payable is not entitled to a preference over a claim not due.
  (3) If there are insufficient assets to pay all claims in full or to satisfy homestead allowance, family allowance, and exempt property, the personal representative shall certify the amount and nature of the deficiency to the trustee of a trust described in section 7605(1) for payment by the trustee in accordance with section 7606. If the personal representative is aware of other non-probate transfers that may be liable for claims and allowances, then, unless the will provides otherwise, the personal representative shall proceed to collect the deficiency in a manner reasonable under the circumstances so that each non-probate transfer, including those made under a trust described in section 7605(1), bears a proportionate share or equitable share of the total burden.

A proper assessment of the probate estate by a funeral director may provide an alternative source for payment in the event that the family has no liquid assets and no life insurance available to pay the funeral bill.

The Probate Pro can assist in the assessment of the payment of the funeral bill. Please call 1 (833) PROBATE.