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: Fiduciary

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Cemetery Care Fund Reports: The Operator’s Vicarious Liability

Posted in Cemeteries, Fiduciary, Reporting
Typically, the standard by which a cemetery is judged to be abandoned is whether the grass is getting cut.  But for licensed cemeteries, some states’ laws may also include provisions to deem a cemetery abandoned when regulatory reports are not filed.   Care fund reports are intended to inform the cemetery regulator whether the operator is … 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

The NPS Criminal Trial: Vicarious Liability?

Posted in Fiduciary, Investments, Master Trusts, NPS/Lincoln, Preneed
David Wulf may stand alone in the crosshairs of the criminal prosecutors, but his fate will impact the NPS preneed trustees (and possibly other registered investment advisors who manage death care funds). Mr. Wulf had a situation that is unique from what existed in Illinois, Wisconsin, and Tennessee, but is familiar to other death care … Continue Reading

Michigan’s Plan: Target Date Investment Strategy

Posted in Fiduciary, Funeral, Investments, Preneed
I stand corrected. A representative of the Michigan Funeral Directors Association advises that their request for proposal for a new investment advisor for the master trust has resulted in the selection of a firm that will not only assume a true fiduciary relationship to funeral directors and consumers, but that will also guide the Association … 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

A Peace Offering: Fiducary Partners and the WFDA Receiver

Posted in Fiduciary, IFDA, Master Trusts
Fiduciary Partners, the corporate fiduciary for the Wisconsin and Illinois master trusts, broke its silence this week with a statement to the Funeral Service Insider. The statement was made in response to criticisms previously reported by FSI, and reflects the receiver and fiduciary working together to get their “message” out and avoid the kind of … Continue Reading

Checks and Balances: Who has your back?

Posted in Administration, Fiduciary, Master Trusts, Preneed
In the days that followed the Wisconsin Funeral Directors Association being placed into receivership, some of the WFDA’s sister associations were quick to point out they had ‘checks and balances’ that would protect consumers’ funds from the problems that tripped up the Wisconsin Funeral Trust. As we reported in our last post, a crucial ‘check … Continue Reading

One Too Many Guarantees: Wisconsin and the SEC

Posted in Fiduciary, Funeral, Master Trusts
When news that the Wisconsin Funeral Directors Association and its master trust had been put into receivership, I anticipated that the association may have fallen victim to a perfect storm: when an antiquated preneed law collides with a volatile investment market. But, subsequent news accounts are painting a bleak picture of poor planning and poor … Continue Reading

Preneed Fund Manager: Is your O&E coverage current?

Posted in Fiduciary, Master Trusts, Preneed
Many state preneed regulators share the point of view that the payments made toward a preneed contract belong to the consumer until the prearranged funeral is provided. This perspective was adopted by the California Attorney General in its Eighth Cause of Action brought against the California Funeral Directors Association and its Master Trust. The AG … Continue Reading

Fiduciary Accountability: Illinois and the annual statement

Posted in Fiduciary, Funeral, IFDA, Preneed
Regulators in California, Missouri and Kansas have already implemented strategies that are intended to make preneed fiduciaries more accountable to the consumer. Over the past few weeks, this blog has covered new reporting requirements in Missouri and the audit drama playing out in California. In Kansas, the fiduciary for a failed cemetery has been sued for … Continue Reading

California’s Pending Consumer Refund

Posted in Fiduciary, IFDA, Preneed
California funeral directors face a September 13th deadline that could have substantial financial consequences, including the repayment of trust distributions. A July 1st letter sent by the California’s Cemetery & Funeral Bureau to funeral homes in the California Master Trust outlined the regulator’s rejection of the Association responses regarding the Master Trust audit. An impatient … Continue Reading

Illinois: the initial insurance premium is coming due

Posted in Fiduciary, Funeral, IFDA, Preneed
The Comptroller’s Office mailed out letters to funeral homes last week advising how to report the first contribution to the Pre-Need Funeral Consumer Protection Fund. The letter tracks the first few paragraphs of the “Senate Bill 1682 Information” page from the Comptroller’s website. The funeral home letter includes two documents: a Fee Payment Record and … Continue Reading

Taking comfort from the local banker

Posted in Compliance, Fiduciary, Preneed
Within the past few years, state legislatures have significantly expanded the fiduciary duties of banks and trust companies that service death care trusts. Michigan, Indiana and Tennessee responded to cemetery trust frauds (including the Clayton Smart affair). The trend continued in Missouri and Illinois with laws aimed at funeral trusts (in response to NPS and … Continue Reading

Annual Investment Reviews: the need to diversify

Posted in Fiduciary, Preneed
The ICCFA’s November Magazine included an article by Craig Martin that provides good advice for all death care trusts. Death care trusts are notoriously bad performers, and if operators are to improve investment performance they need to work more closely with their fiduciaries and portfolio managers. Mr. Martin offers 5 tips that are equally applicable … Continue Reading

Missouri Preneed Fiduciaries and Big Brother

Posted in Fiduciary, Missouri - SB1, Preneed
One criticism of Missouri’s prior preneed law was that the Attorney General’s office was dependent upon the State Board to refer complaints for legal enforcement. If the State Board didn’t refer a Chapter 436 violation, the AG’s only enforcement alternative was to pursue an action under Missouri’s Merchandising Practices Act (Chapter 407). During the 2008 … Continue Reading

But, we had a deal….

Posted in Fiduciary, IFDA
Rather than defend the legality of its master trust, the IFDA sought to enforce the gentlemen’s agreement that the association perceived it had with the Comptroller. The 2006 exchange of correspondence reported by the State Journal-Register underscores the risks that death care operators take when they structure arrangements that exceed the parameters of applicable law. … Continue Reading

A Change in Accounting: Missouri’s new preneed law

Posted in Fiduciary, Legislation, Preneed, Reform
For twenty-five years, Missouri funeral directors have had it easy with regard to accounting for consumers’ preneed payments. Chapter 436 required the preneed seller to maintain 80% of the preneed contract sales price in trust. The Missouri law also allowed the preneed seller to withdraw income so long as the 80% threshold was maintained. Consequently, … Continue Reading

The Comptroller’s bill: raising the bar for foreign fiduciaries

Posted in Fiduciary, IFDA, Preneed
Finding a fiduciary institution that is both knowledgeable and receptive has proven a challenge to funeral directors. Until a few years ago, the larger operators could rely upon the size of their trust to at least generate interest from prospective institutions. However, litigation exposures are now causing institutions to hesitate with even the largest of … Continue Reading

They can’t legislate morality, but they can impose due diligence requirements

Posted in Fiduciary, IFDA, Legislation, Preneed, Reform
Missouri’s preneed reform legislation will be amended on the House floor in the next day or so, and some of the Representatives have heard that old phrase about legislating morality. There is some truth to that phrase, and to some of the other objections raised against the reform legislation. Preneed oversight will impose a substantial … Continue Reading

Tax Day and next year’s QFT

Posted in Fiduciary, Preneed, Preneed Tax
Many preneed trusts either experienced significant capital losses last year or are sitting on assets that have unrealized losses. For those trusts that have taken a Section 685 election, these losses may be carried into future years as a capital loss carryover. While everyone would prefer to avoid realizing those losses, that loss can be … Continue Reading