Death Care Compliance Law

Death Care Compliance Law

Preneed: A Pandora's Box of Problems

William Stalter is the founder of Stalter Legal Services and the Preneed Resource Company. Bill focuses his law practice on preneed and death care compliance, serving banks, funeral homes, crematories, and cemeteries. He has written multiple published articles

Category Archives: Missouri – SB1

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Missouri’s Second Round of Exams: The Committee’s Role

Posted in Compliance, Exams/audits, Missouri - SB1
In September we posted about a regulation proposal that sought to define the role of a sub-committee of the Missouri State Board of Embalmers and Funeral Directors (Missouri’s Financial Examination Committee: What Role?).   While the Board eventually gave its staff instructions to revise that proposal, the regulation has yet to resurface.  Instead, the Staff Recommendations include… Continue Reading

Missouri’s Second Round of Exams: Exit Interviews

Posted in Compliance, Exams/audits, Missouri - SB1
In a prior post we alluded to Missouri preneed sellers’ complaints about the examination process, and that the follow up process to the on-site review has been unnecessarily burdensome.  Subsequent to the examiner’s departure from the funeral home, the seller received an exception list of missing contracts or documents, which the seller can often quickly locate. … Continue Reading

Missouri Second Round of Exams: 100% Reviews

Posted in Compliance, Exams/audits, Missouri - SB1
The Missouri State Board of Embalmers and Funeral Directors and the Board’s staff are engaged in an awkward exercise of establishing audit policies for the state’s preneed industry. The staff, employees of the Division of Professional Registration, must take the lead in making recommendations to the Board. The Board then must approve the recommendations, or… Continue Reading

The Missouri Fund Manager: What was Grandfathered?

Posted in Associations, Master Trusts, Missouri - SB1
There seems to be some confusion in Missouri over the permissible contractual relationships among the preneed seller, the preneed trustee and the independent investment advisor. Prior to the collapse of NPS, and the subsequent amendment of Missouri’s preneed law, Chapter 436 allowed the preneed seller to incorporate provisions in its preneed trust agreement to instruct… Continue Reading

The Missouri Funeral Trust Lawsuit: Is Investment Performance a Trade Secret?

Posted in Master Trusts, Missouri - SB1
The MFT did not catch a break with the court assigned to its lawsuit against the Missouri State Board of Embalmers and Funeral Directors and Catholic Fraternal Life.   The hearing scheduled for September 28th was continued for another four weeks, and in the meantime, the parties continue to file evidentiary discovery requests.  The Association’s preneed… Continue Reading

The Missouri Funeral Trust and its Catch-22

Posted in Compliance, Master Trusts, Missouri - SB1, Recordkeeping
A status hearing is scheduled for September 28th in the lawsuit filed by the Missouri Funeral Trust against the State Board of Embalmers and Funeral Directors and Catholic Fraternal Life.   The lawsuit is now 4 months removed from the request for a temporary restraining order that, among other relief sought, would stay the financial examination… Continue Reading

Missouri’s Financial Examination Committee: What role?

Posted in Compliance, Exams/audits, Missouri - SB1
When the Missouri State Board of Embalmers and Funeral Directors meet this week, the role of the Board’s Financial Examination Committee will be discussed.  As established, the Financial Examination Committee was intended to expedite the exam process.  The initial Committee consisted of the Board’s public member and a former industry member who had previously acknowledged… Continue Reading

Missouri’s Next Round of Preneed Examinations: Drilling Deeper?

Posted in Compliance, Exams/audits, Missouri - SB1
When the Missouri State Board of Embalmers and Funeral Directors meets this week, their staff will be seeking input regarding the scope of the second round of preneed audits.  Each preneed seller is to be audited at least once every five years, and the first round of audits was ‘concluded’ this year.   Included on the… Continue Reading

The MFT Lawsuit Claims: The Client List

Posted in Associations, Master Trusts, Missouri - SB1, Preneed
The lawsuit brought by the Missouri Funeral Trust against the Missouri State Board of Embalmers and Funeral Directors and CFL Pre-Need includes  a number of unique and dubious claims.  For example, the lawsuit defines CFL Pre-Need, an insurance company, as a competitor but not funeral home clients that are licensed as a preneed seller.  The… Continue Reading

Preneed Trust Shortages: Investment Management Fees

Posted in Associations, Compliance, Investments, Master Trusts, Missouri - SB1
One strength of the state association master trust is that it can provide the ‘critical mass’ required for economies of scale to reduce trust management costs.  As the state master trust grows in size, the association can better negotiate asset management arrangements.  However, the reality has been very different for these programs.  The reorganization of… Continue Reading

Missouri Funeral Trust: Seeking a Gag Order

Posted in Associations, Master Trusts, Missouri - SB1
On July 27th, a Missouri court will consider a motion filed by the Missouri State Board of Embalmers and Funeral Directors to be dismissed from the lawsuit filed by the Missouri Funeral Trust.  One of the allegations made by the Missouri Funeral Trust was that confidential information obtained by a state auditor regarding the program’s weaknesses… Continue Reading

Preneed Trust Shortages: Deposit Plus Accounting

Posted in Administration, Compliance, Legislation, Missouri - SB1
During its state convention, the executive director for the Missouri Funeral Director and Embalmers Association stated that their master trust program would have a $3 million dollar surplus if all preneed contract beneficiaries were to die that day.  If the Missouri program were being administered pursuant to common trust fund rules, there should not be… Continue Reading

The Missouri Agenda: a few clean up provisions

Posted in Missouri - SB1
The Missouri State Board of Embalmers and Funeral Directors will meet to July 21st to discuss “a short slate” of legislation and regulation proposals.   While many of the proposals have been previously discussed, some, such as the preneed shortage funding requirement, are new.  We also note regulation proposals regarding when forms and reports are deemed… Continue Reading

Preneed Trust Shortages: Missouri’s Income Withdrawals

Posted in Exams/audits, Investments, Legislation, Master Trusts, Missouri - SB1, Recordkeeping, Reporting, Trust Funded
Prior to Missouri re-writing its preneed law in 2009, preneed sellers could draw off realized income so long as the withdrawal did not reduce the trust’s fair market value below trust deposits.   Seeking income, many Missouri sellers directed their trustees to invest in bonds.  As interest rates declined during the early part of the prior… Continue Reading

Missouri and Preneed Deficiencies: What is a shortage?

Posted in Legislation, Master Trusts, Missouri - SB1, Preneed Shortfalls, Reporting, Trust Funded
At its June meeting, the Missouri State Board of Embalmers and Funeral Directors gave instructions to their staff to draft legislation that would provide the Board powers to force preneed sellers to contribute funds to their trusts to cover ‘shortages’.   The instruction was not without some controversy as one Board member questioned why he was… Continue Reading

NPS’ Legacy of Damages: No One Knows How Deep the Waters Were

Posted in Associations, Exams/audits, Master Trusts, Missouri - SB1, NPS/Lincoln, Recordkeeping
When NPS first collapsed, the estimate of the company’s liabilities to funeral homes was reported to have been as much as a billion dollars.  When the SDR finally brought the case to trial, the damages awarded by the jury were less than half of the original estimate.   While this author believes the actual damages are… Continue Reading

NPS Trustees: Standard of Care for Investments

Posted in Compliance, Investments, Missouri - SB1, NPS/Lincoln
Now that a judgment has been rendered against Allegiant Bank, the NPS litigation will move on to the appeal stage where the focus will be on R.S.Mo. Section 436.031.  The NPS trustees universally argued that this provision of the Missouri preneed statute relieved them of all responsibility and liability for investment supervision.  As set out… Continue Reading

NPS Trustees: Standard of Care for Preneed Administration

Posted in Administration, Compliance, Missouri - SB1, NPS/Lincoln, Recordkeeping
Final arguments were heard in the NPS civil trial this past Friday.  With the SDR having presented evidence through the prior Friday, the defendant trustees presented their case in less than a week.  This may reflect that the NPS trustees had viewed their duties as having been defined by Chapter 436 as relatively low.  As… Continue Reading

NPS Trustees: Pre-acceptance Due Diligence

Posted in Compliance, Fiduciary, Missouri - SB1, NPS/Lincoln
The Office of the Comptroller of the Currency (the OCC) supervises the fiduciary activities of national chartered banks, and in February, updated the guidelines used by its examiners.  The “Personal Fiduciary Activities” booklet includes a section on pre-acceptance due diligence that fiduciaries should conduct before agreeing to serve as trustee for an account.  Page 7… Continue Reading