The backpacker murderer died in the hospital of Long Bay Jail on Sunday morning after being diagnosed with oesophageal and stomach cancer in May.
He wrote a one-page letter on Thursday to brother Bill and sister-in-law Carol, with instructions for it to be sealed until his death.
In it, the 74-year-old insisted the NSW government should pay for his funeral.
“Please don’t pay for my funeral services or contribute in any way,” Milat said.
The Sydney Morning Herald reports Milat wrote in the letter that he had advised the Commissioner of Corrective Services NSW of his wishes.
However, a Corrective Services spokeswoman told AAP on Monday the Commissioner had not received any recent correspondence from Milat.
Milat signed off the letter with his name and a small illustration of a figure with a halo above the word “innocent”.
The spokeswoman on Monday said the department would “under no circumstances” be paying for the funeral, and Corrections Minister Anthony Roberts on Tuesday reiterated that message.
“Hell will freeze over before Corrections pays a cent for Ivan Milat’s funeral,” Roberts told 2GB Radio.
Bill Milat said the arrangement was that the chaplain at Long Bay Jail “would take care of everything on our behalf,” the Sydney Morning Herald reported on Tuesday.
“The $2000 to be contributed by Correctives was going to cover the cremation,” Bill Milat said.
“But because of all the media coverage and the public outrage that’s not going to happen any more.”
“This morning the chaplain has rung us up and says Corrective Services has withdrawn that and then he said “What do you want to do?”,” he said.
Bill Milat said the last wishes of his brother – who he refers to as “Mac” – was that the family not pay for anything “so we are sticking to that and that’s it”.
“So I told him when they finish at the Coroner’s Court, stick him back in the car and take him back to Long Bay and they can decide what they want to do … That’s up to you.”
A spokeswoman for the NSW Coroner’s Court said the coroner has ordered a police brief of evidence into Milat’s death.
“An inquest will be held on a date to be fixed. In NSW, it is mandatory to conduct an inquest into a death in custody,” the spokeswoman told AAP in a statement.
Milat was sentenced in 1996 to seven consecutive life sentences for murdering seven backpackers whose bodies were found in makeshift graves in the Belanglo State Forest in the 1990s.
He is suspected of having committed many more murders, including the killings of at least three people whose bodies were found in three other forests between 1971 and 1991.
But he told the detectives he could not tell them anything about the deaths of three women in the Newcastle area.
“His body will remain on ice until the family stumps up cash or can tell NSW Police where the bodies are buried,” Roberts said.
Detectives interviewed Milat eight times in jail and hospital in the weeks before he died, the Nine Network reported on Monday.
“You could put a blowtorch to me ears or eyes or whatever and … I can’t help ya,” Milat told detectives, saying there was no evidence against him.
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