What can happen if the interest from a trust does not keep pace with inflation for funeral services?

When the interest generated by a trust does not keep pace with inflation, the purchasing power of the funds allocated for funeral services diminishes over time. This means that even if the trust was initially sufficient to cover the anticipated costs of those services at the time it was established, it may not be adequate when the time comes to actually pay for the funeral. As inflation causes the cost of goods and services to rise, the trust’s ability to cover these increased costs may fall short. Consequently, the family may need to contribute additional funds to cover the difference between what the trust can provide and the current costs of the funeral services.

In this scenario, the other options do not accurately reflect the dynamics at play. The notion that the services will always be covered does not hold true in the face of rising costs due to inflation. The idea of the trust automatically replenishing itself does not account for stagnant interest rates that fail to match inflation. Lastly, the suggestion that the funeral director would absorb any excess costs is unlikely, as typically, the responsibility to cover shortfalls would fall back on the family. Therefore, the need for additional funds from the family is the correct and most logical conclusion in this situation.