How To Buy A Funeral Home ((HOT))
The funeral home industry is in many ways a prime target for private equity, which looks for markets that are highly fragmented and could benefit from consolidation. By cobbling together chains of funeral homes, these firms can leverage economies of scale in purchasing, improve marketing strategies, and share administrative functions.
how to buy a funeral home
Although funeral price data is not readily available to the public, surveys by the local affiliates of the alliance have found that when publicly traded or private equity-backed chains acquire individual funeral homes, price hikes tend to follow.
In Tucson, Arizona, for example, when a local owner sold Angel Valley Funeral Home in 2019 to private equity-backed Foundation Partners Group, prices increased from $425 to $760 for a cremation, from $1,840 to $2,485 for a burial with no viewing or visitation, and from $3,405 to $4,480 for a full, economical funeral.
In the Arizona city of Mesa, the sale of Lakeshore Mortuary to the publicly traded funeral home chain Service Corporation International led to price increases for a cremation from $1,565 in 2018 to $1,770 in 2021, for a burial from $2,795 to $3,680, and for an economical funeral from $4,385 to $5,090.
Foundation Partners Group officials said the price increases partly reflect the higher price of supplies, such as caskets, as well as increasing labor costs. But most of the increases, they said, represent a move to a more transparent pricing system that includes administrative and transportation fees that other funeral homes add on later.
A big surge of consolidation happened in the U.S. funeral home industry in the late 1980s and early 1990s, and again around 2010, said Chris Cruger, a Phoenix-based consultant to the industry. And acquisitions have reached a feverish pace in the past two to three years. Many investors are banking on a significant uptick in demand for death care services in the coming years as 73 million baby boomers, the oldest of whom will be in their late 70s, continue to age.
Meanwhile, many funeral home owner-operators are reaching retirement age and have no one in the family willing to take over. A 2021 survey by the National Funeral Directors Association found that 27% of owners planned to sell their business or retire within five years.
The value in funeral homes lies in more than their brick-and-mortar assets. Funeral home directors are often integral parts of their communities and have established significant goodwill with their neighbors. So when corporate chains acquire these homes, they rarely change the name and often keep the former owners around to smooth the transition.
Instead, Olthof sold to Greg Rollings, a former funeral director who had amassed a privately owned, 90-site chain of funeral homes throughout the Northeast. Rollings had offered less money than the big chains had, but he knew what it was like to be awoken at 2:30 a.m. and put on a suit to go help a grieving family. He knew what it was like to bury a child.
For most families, a funeral will be one of the largest expenses they ever incur. But they often enter the shopping process cognitively impaired by grief and unsure of what is customary or appropriate.
Foundation Partners Group is a prime example. Backed by the private equity firm Access Holdings, the funeral home chain shifted five years ago to acquiring funeral homes with high cremation rates. Cremation rates nationally have been steadily climbing over the past two decades, with nearly 58% of families now choosing cremation over casket burials. Foundation Partners expects that rate to hit 70% by 2030.
Pre-need insurance is a whole-life policy offered by funeral providers, with installments paid to an intermediary insurance company. In some states, you must name the funeral home director as the beneficiary; other states forbid it. The insurance company pays the death benefit immediately. Burial insurance is a life insurance policy usually sold by insurance companies, but in some states it may also be offered by funeral homes. The beneficiary can use the death benefits any way he or she chooses.
With a funeral trust plan, you sign a contract and pay the funeral home the cost of a funeral either in installments or in a lump sum. The director places the money into an interest-bearing trust account, and serves as the trustee. After death, the trust funds are paid directly to the funeral provider named as trustee.
The only reason to consider prepaying your funeral, burial, or cremation is to shelter your assets from Medicaid. Money you set aside in an irrevocable trust will be excluded from your net assets when your eligibility to receive Supplementary Security Income (SSI) or Medicaid benefits is determined. On the other hand, money placed in a revocable trust can be taken by Medicaid if your other assets have been depleted. Maximum allowable assets vary by state, but may be as low as $2,000.
We heartily endorse advance planning, which allows comparison-shopping and makes the arrangements easier for your survivors. But if you decide to pay for your funeral in advance, be very cautious. You should interview and evaluate multiple funeral homes before signing any agreement for future delivery of funeral goods and services. Your local funeral consumer group can help you with the research. The final decision is yours, so choose wisely.
One of the many reasons for which traditional funerals are losing popularity is the high price of the services. With the casket being the most expensive spending in a funeral, and people still wanting to have a conventional burial, the market online came pretty naturally.
The days when you'd have to buy everything you need for the funeral from the funeral home are long gone. Not only can you buy caskets online for a lower price, but you can also have the funeral service as intended. And you don't need to worry about the funeral home forcing you into getting the casket from them. Keep reading for the details!
The Funeral Rule has multiple specifications, but when it comes to your possibility of buying the casket online or not, the answer is 100% Yes. The FTC in the United States of America asks that every funeral home is obliged to take coffins that you bought online.
The Rule specifies that the funeral provider have no other legal option but to accept handling a casket/urn that you bought online, at a local casket store or anywhere else. The funeral provider is also obliged not to charge any fees by handling a casket/urn purchased from another seller, either. 041b061a72