These days, a lot of people pre-arrange and pre-pay their own funeral arrangements. I have yet to see a case where an executor ignores pre-paid arrangements.
Funeral expenses are paid first before any other debts, and before any beneficiaries receive their inheritances. Because of that, the amount of funeral expenses incurred has a direct impact on how much money is left in an estate for other people. This is especially true of a modest estate.
It is possible for an executor to spend too much or too little on a funeral. The common-law rule is that a suitable amount to spend depends on the deceased's station in life and circumstances.
The word "circumstances" here refers at least in part to financial situation. If a person dies leaving $50,000 for his or her family, it probably doesn't make sense to spend $20,000 on a funeral. That would leave the family in dire straits. If, however, a person dies leaving several million dollars for his or her family, $20,000 for a funeral doesn't seem outrageous.
An executor has to decide what is reasonable in the circumstances, and should keep in mind that if he or she goes beyond what is reasonable, he or she may be held personally liable to repay the excess amount to the estate. For example, if an excessive amount is spent on a funeral, leaving insufficient estate funds to pay a creditor, the executor should expect that the creditor might wish to sue him or her.
Most people don't realize that a headstone is not generally considered to be a funeral expense. The best way to proceed there is to get permission from all of the beneficiaries to pay for a headstone out of the estate. Expenses that are considered funeral expenses are:
- purchase of the plot
- funeral home services
- purchase of casket or urn
- clothing for the deceased
- obituaries in the newspaper
- lunch or reception
- honorarium for person conducting the service
Even though an executor is not legally bound to follow a deceased's wishes for dealing with remains, it's a good idea for the executor to check the Will for any specific instructions. My experience with Wills is that many people who have not made their own pre-arrangements will request a simple or minimal funeral. I think of this as the "pine box mentality". Others like to specify that there should be an enormous party celebration with liquor flowing and lots of food (with my Newfie roots, I tend to agree with this approach). Usually if an executor follows the deceased's instructions as best he or she can, there is less likely to be a challenge from family members about the costs.