What happens if a prepaid funeral provider fails?

Written by · Reviewed by Smiths Insurance & KiwiSaver, licensed Financial Advice Provider (FSP712931) · Updated 2026-10-20 · Reviewed quarterly, when the underlying data is restated.

Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name.

If a prepaid funeral provider fails in New Zealand, what happens to your money depends on who holds it. We found no national rule that protects every prepayment. Money held on trust by a plan company or trustee company is meant to sit apart from a funeral home. Money paid into a funeral home's own account may not, and then recovery follows the normal liquidation process.

That is the short answer, and it is narrower than the claims you will see on some websites. Three kinds of arrangement exist. Now For Them, the plan run through funeral homes that belong to the Funeral Directors Association of New Zealand (FDANZ), says its company "holds those funds on trust" and does not accept payments through a funeral home (Now For Them terms and conditions, June 2026). Public Trust, a trustee company, holds money in its own fund and says the fund's capital and interest are guaranteed by the New Zealand Government (Public Trust price list). A funeral home's own prepaid arrangement can be anything, and Consumer NZ advises you to ask what happens to the money if the funeral home goes out of business (Consumer NZ). Not every prepayment is government-guaranteed. Only the contract tells you which kind you have. This page is general information, not legal advice.

Find out which kind of arrangement you have

Answer these in order. The first answer you cannot get is the one to chase.

  1. Did your money go to a funeral home, or to a separate trustee or plan company? Now For Them's terms say payments through a funeral home are not permitted: "All payments must be credited directly to the Company via a New Zealand bank." A payment handed to a funeral home is a different arrangement.
  2. Does the contract say the money is held on trust? Look for the word "trust" and for the name of the trustee or the company that holds it.
  3. Is the trustee or company licensed or regulated? Now For Them's terms say its company is on the Financial Service Providers Register but "not licensed by a New Zealand regulator to provide the Now For Them plan", and that registration "does not mean" it is under "active regulation or oversight". We did not find a regulator that supervises funeral prepayments as a class, so do not assume there is one.
  4. Who can you complain to? Now For Them names Financial Services Complaints Limited, a free independent dispute resolution service, for complaints you cannot settle with the company. FDANZ hears complaints only about its member funeral homes, and the Commerce Commission can be approached about pricing (FDANZ, 2026 report).

What the sources say about each kind

Now For Them Public Trust Funeral home's own arrangement
Who holds the money The Funeral Trust Services Limited, a charitable company set up by The Charitable Funeral Trust, which FDANZ established Public Trust, in its Funeral Trust Cash Fund, under a Master Trust Deed dated 3 April 2017 Check the contract
If a member funeral home leaves the association Your account is linked to another member firm "in the area", and your estate can still use the original funeral home Not applicable: Public Trust is not a funeral director Check the contract
If the plan company winds up The terms cover a wind-up decided by the trustees or directors: "you will receive the funds you have paid", subject to anti-money-laundering checks. They say nothing about insolvency Public Trust says capital and interest in the Common Fund are guaranteed by the New Zealand Government, citing section 52 of the Public Trust Act 2001 and section 65ZD of the Public Finance Act 1989 Check the contract
What it does not promise The price. Prices are "not guaranteed or underwritten by the Company", and a Funeral Assistance Payment is discretionary The price; invoices are paid from the balance Check the contract

Sources: the Now For Them terms, Public Trust's price list and brochure, and Consumer NZ. We have quoted Public Trust's description of its guarantee and have not tested it against the legislation, so read the footnote on the price list for yourself.

Two cautions. First, the Now For Them plan changed in 2026: FDANZ says customers of The Funeral Trust moved automatically to Now For Them from 1 July 2026 after a High Court decision on 16 June 2026, and that new terms were sent by mail (FDANZ: For existing Funeral Trust clients). Statements on older pages, such as an earlier FAQ that said customers would be protected whatever happened to their funeral director, may not describe the plan you hold now. Use the current terms. Second, "held on trust" is a structure, not a guarantee that the funeral is paid in full. If the funeral costs more than your balance, the shortfall falls to your estate or family.

If the money was paid to a funeral home that has gone into liquidation

If your contract does not put the money with a separate trustee, a liquidation is the process that applies. The Insolvency and Trustee Service says you cannot chase a company in liquidation for payment directly: you should file a claim, and you need evidence for it, or the claim may be rejected or accepted for less (Insolvency and Trustee Service: owed money by a company in liquidation, last updated 25 February 2026). Preferential creditors, such as employees owed wages and Inland Revenue, are paid ahead of other creditors, and the service says it is common for only preferential creditors to receive payment. Payments are normally made at the end of the liquidation, so a customer with no special status may recover little or nothing.

The service's pages do not say how a customer who has paid in advance is treated, and its page on types of creditor does not address deposits. So we cannot say how much, if anything, you would recover. Ask the liquidator, and keep the contract, receipts and bank records. If you paid by credit card, ask your card provider whether the charge can be disputed. We did not find a time limit we can cite, so ask early.

If your provider has closed and a death has happened

  1. Find the contract and the proof of payment. Look for the name of any trustee or plan company.
  2. Ring the trustee or plan company, not the old funeral home. The contact number in Now For Them's terms is 0800 332 693. Public Trust is on 0800 371 471.
  3. Ask a new funeral home to invoice the trustee. Under Now For Them's terms, a member firm liaises with the company to arrange payment directly to the funeral invoice; if the estate uses a non-member firm, the estate contacts the company, the balance is paid to the estate, and the family pays the invoice. Public Trust says invoices are sent to it and it arranges payment.
  4. Check the other ways to pay before you pay extra. The bank can release money from the deceased's account to pay for the funeral without waiting for probate (govt.nz: What to do when someone dies). See paying for a funeral for the other routes, including the Work and Income grant.
  5. Complain if you need to. Start with the company, then the free dispute scheme it names.

Before you prepay: questions that cover failure

Ask A clear answer looks like A reason to pause
Who holds my money? A named trustee or company, in writing "We look after it" with no name
Is it on trust, and for whom? The word "trust" in the contract A trading account or "deposit"
What happens if you close? A clause naming where the money goes No clause at all
Can my family use another funeral home? Yes, with a described process "Only with us"
Who regulates you? A named body, or an honest "no one" A claim of a guarantee you cannot read
Is the price fixed? Yes or no, in writing A verbal promise

Other ways to plan, and their own risks

Saving the money yourself carries no provider risk, but nothing stops you spending it. Funeral insurance moves the risk to an insurer instead. Momentum Life Limited issues Funeral Insurance for New Zealanders aged 40 to 75, with no health questions, for benefits of $3,000 to $30,000. In the first 24 months the benefit is paid only for accidental death (within 90 days of the accident); on any other death in that window no benefit is paid and all premiums are refunded. The premiums paid in total can exceed the benefit, and the benefit may not cover the whole funeral. Momentum is licensed by the Reserve Bank, but its A.M. Best rating is B (Fair), which sits in A.M. Best's "Vulnerable" range, and its own page puts solvency at 107% at 30 June 2026 (Momentum Life: financial strength). It does not accept new applicants over 75. Our comparison of insurance and prepaid funerals sets the two side by side.

The buttons on this page open Momentum Life's online application. QuoteHub is a Momentum Life partner and Smiths Insurance & KiwiSaver may receive a commission if you buy a Momentum policy (how we are paid). Advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). Back to the overview of prepaid funerals or the funeral insurance hub.

Adviser's view

Where your money sits matters more than the label on the plan. Money paid to a trustee or plan company that holds it on trust is in a different position from money paid into a funeral home's own account, and we found no source that says every prepayment is protected. Ask in writing who holds your money, and keep the contract.
, Financial Adviser (FSP1010699). General information, not personalised financial advice.

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Cite this page QuoteHub NZ (2026). Prepaid Funeral Provider Failure NZ: What Happens?. www.quotehub.co.nz/guides/when-someone-dies/prepaid-funeral-provider-failure-nz. Updated 2026-10-20.

References

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