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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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

Missouri and the Investment Advisor: A Chinese Wall

Posted in Fiduciary, Funeral, Investments, Missouri - SB1, Preneed
Among the rule proposals suggested by the Division of Professional Registration to the State Board of Embalmers and Funeral Directors was the following definition of “External Investment Advisor”: any licensed, qualified investment advisor approved and authorized by the trustee of the preneed trust and who holds no personal interest in any assets of the preneed… Continue Reading

Transferee Liability: Hidden Obligations

Posted in Missouri - SB1
The Dead Beat recently published a letter from a Missouri funeral home operator that was critical of the ‘handling of the NPS debacle’ by the Missouri State Board of Embalmers and Funeral Directors. The operator questioned how the Board could ‘allow’ his firm to sign official documents requiring that NPS contracts be honored. The official… Continue Reading

Formal Rulemaking: Missouri’s test of patience

Posted in Missouri - SB1, Preneed
At its December meeting, Missouri’s State Board of Embalmers and Funeral Directors will seek input from licensees and consumers regarding several rulemaking proposals. The proposals were published on the Board’s website in November, with a request that comments be provided to the Board by December 2nd. This represents a prelude to the formal rulemaking process… Continue Reading

Missouri’s First Preneed Regulation: if at first you don’t succeed, try, try again

Posted in Missouri - SB1, Preneed, Preplanning
More than one funeral director has expressed the opinion that the State Board should never have been given rule making authority. We’ll never know, but if the State Board had rulemaking authority 22 years ago, it could have implemented rules to help enforce NPS’ 1990 settlement agreement, and thereby avoided that company’s collapse. But equally… Continue Reading

Did Someone Ask “Who’s the Boss?”

Posted in Missouri - SB1, Preneed
Three years ago we asked that question with regard to the power struggle occurring between the Missouri State Board of Embalmers and Funeral Directors and the Missouri Division of Professional Registration staff. That post was influenced by our experiences with preneed regulators from other states, who range from elected politicians to the revolving door bureaucrat.… Continue Reading

Master Trusts: Finding the Rails

Posted in Fiduciary, Guaranteed, IFDA, Master Trusts, Missouri - SB1, Non-guaranteed, Preneed, Trust Funded
Both the Memorial Business Journal and the Funeral Service Insider commented last week on the Milwaukee Journal Sentinel’s February 7th article regarding the former executive director of the Wisconsin Funeral Directors Association. Several issues were raised that should be included in future industry debate, and in particular, I would agree with Mr. Isard’s questions whether… Continue Reading