Funeral trusts allow people to pay funeral expenses in advance, and that can spare survivors a lot of difficult decisions, say advocates. Some nursing homes even require a funeral trust as a condition of admission. But if the trustees aren't reputable or the information isn't current, financial planners warn that such trusts can bring bereaved families more grief.

The Internal Revenue Service defines a funeral trust as "a 'pooled income fund' set up by a funeral home or cemetery to which a person transfers property to cover future funeral and burial costs. They're often referred to as "pre-need programs.

A funeral trust is a contract you enter into with a provider of funeral or burial services. Often, the trust is entered into directly with the funeral home, which may agree to "lock in" costs for future funeral or burial services at an agreed upon price. The funeral home sometimes serves as trustee (manager of trust assets), and you usually fund the trust with cash, bonds, or life insurance. A revocable funeral trust can be changed and revoked by you at any time. An irrevocable trust can't be changed or revoked, and you generally can't get your money out except to pay for funeral services.