For the past three and half years, many Illinois funeral homes teetered on the brink of financial crisis when the IFDA master trust was forced to write down the value of preneed accounts invested in a special tax exempt fund. As reported last week by the NFDA’s Memorial Business Journal*, the “new” IFDA has negotiated settlements that could restore a significant portion of the write down of the tax-exempt fund. Credit is due to those funeral directors who made a commitment to change the leadership at the association.
The settlement of a class action suit must be approved before funds can be distributed. A hearing on the settlement has been scheduled for June 12th.
The larger of the two settlement funds will be distributed pursuant to Paragraph 4 of the Consent Order (page 13) approved by Illinois Secretary of State. The Consent Order defines “Eligible Pre-Need Contracts” as a contract that was not only subject to the value write-down, but also outstanding as of July 31, 2010. This definition will exclude preneed contracts that were written down in value, but serviced prior to July 31, 2010. In contrast to the settlement administered last year by the Illinois Secretary of State, these settlements will be paid to the trustee instead of the funeral homes.
The terms of the class action lawsuit settlement agreement will govern how that fund is to be distributed.
*"Reprinted with permission from the February 23, 2012 issue of the Memorial Business Journal. To subscribe please call 609-815-8145."