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: Preneed

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No Relief from the Federal Reserve: the September Announcement

Posted in Compliance, Guaranteed, Insurance Funded, Investments, Preneed
For an industry that has been dependent on interest income, the past 9 years have been tough on the death care industry.  Interest rates started to decline 9 years ago, with the bottom hitting in 2008.   Zero interest rates forced death care fiduciaries to diversify into equity investments, but trusts have experienced a sideways market… 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: 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

Preneed Downgrades: Refunds

Posted in Compliance, Guaranteed, Preneed, Trust Funded
With increasing regularity, preneed consumers are downgrading from traditional funerals to cremation services.  To accommodate the consumer, funeral homes often amend the original contract with a downgrade addendum.   An addendum is used to avoid a contract cancellation and a new contract where additional state fees might be required.    However, downgrade addendum can pose certain problems.… Continue Reading

Trust Funded Preneed and Insurance Assignments

Posted in Compliance, Exams/audits, Guaranteed, Insurance Funded, Non-guaranteed, Preneed, Recordkeeping, Trust Funded
Funeral homes frequently allow the assignment of insurance as partial payment towards a trust funded preneed contract, but the manner in which the assignment is made can cause problems for them.  Preneed trustees will not accept an insurance policy for a host of reasons.  Insurance proceeds paid to a trust are not tax free and… Continue Reading

Rising Interest Rates: A Return to the Good Ole Days?

Posted in Investments, Master Trusts, Trust Funded
For Fed watchers, last week’s announcement signaled a subtle warning that interest rates will likely begin rising by the Summer of 2015.  Since September of 2012, Federal Reserve statements have warned that interest rates would remain unchanged for “a considerable time” after the nation’s economic recovery strengthened.  The reference to “a considerable time” was dropped… Continue Reading

The Factors Contributing to Preneed Shortfalls: Investment Return and Operator’s Performance Costs

Posted in Guaranteed, Insurance Funded, Non-guaranteed, Preneed, Preplanning, Trust Funded, Uncategorized
When the Federal Reserve recently announced the end of the quantitative easing program, it did so with a hint that any increase in interest rates could be a considerable time off.  Several global factors may now cause interest rates to remain at unprecedented lows for longer than what the Fed had suggested last December.  As… Continue Reading

Consumers Payment Options: Administrative Hurdles and Preneed Trusts

Posted in Administration, Associations, Compliance, Master Trusts, Non-guaranteed, NPS/Lincoln, Recordkeeping, Trust Funded
There are three scenarios for administration of preneed installment payments: the funeral operator collects payments, the trustee collects payments or a third party administrator collects payments.  The entity collecting installment payments must be able to apply each payment to the correct preneed account, and provide the other party (or parties) current payment balances.  If the… Continue Reading

Plaintiff’s Star Witness: Doug Cassity

Posted in Insurance Funded, NPS/Lincoln, Preneed Tax, Trust Funded, Uncategorized
The NPS civil trial is scheduled for trial in February 2015, and the SDR’s strategy took a twist when her litigation team filed a motion to dismiss Doug Cassity as a defendant in the lawsuit.  The dismissal probably signals the SDR’s intent to use Mr. Cassity’s testimony.  Now convinced that Mr. Cassity does not have… Continue Reading

Talk of a Lifetime: Restarting the Prearrangment Process

Posted in Non-guaranteed, Preneed, Preplanning, Uncategorized
One message that can be taken from the FAMIC’s Talk of a Lifetime campaign is that funeral directors need to re-think their prearrangement procedures.  Perhaps too much emphasis has been given to preneed, and not enough to the planning process.  Prearrangement marketing and procedures have often been crafted by the funeral home’s preneed funding agent. … Continue Reading

Preneed Contract Holders: the lonely 5%

Posted in Guaranteed, Non-guaranteed, Preneed, Preneed Development, Preplanning, Uncategorized
The Memorial Business Journal recently reported on findings from the NFDA’s 2014 Consumer Awareness and Preferences Study.   Some of the findings may not come as much of a surprise to funeral directors, such as consumer demands are changing.  But, findings regarding how many respondents have made efforts to prearrange, and prepay, for funerals were surprising. … Continue Reading

Qualified Funeral Trusts: once a simple concept

Posted in Master Trusts, Non-guaranteed, Preneed Tax, Taxes, Uncategorized
In has been almost twenty years since the Balanced Budget Act of 1995 introduced the concept of a simplified tax return for preneed trusts.  Initially, the “Qualified Funeral Trust” concept called for a flat 15% tax on accounts with contributions of $5,000 or less.  A conference committee succeeded in getting a higher contribution limitation ($7,000)… Continue Reading

My Preneed Account: Interest Alone Won’t Cut It

Posted in Non-guaranteed, Preplanning, Trust Funded, Uncategorized
Since President Obama unveiled the new MyRA as his plan to revive Americans’ saving habits, we have been making comparisons between funding for retirements and preneed.   Like the MyRA, the non-guaranteed preneed contract could represent more of an introduction to preplanning funding than the final preneed product.  As the AARP acknowledged a few years ago,… Continue Reading

MyPA: No Free Passes

Posted in Non-guaranteed, Preplanning, Uncategorized
Our recent post on similarities of the MyRA and non-guaranteed preneed concluded with references to how criticisms of President Obama’s new retirement account were applicable to preneed.  One such criticism relates to the lack of investment performance, but we will save that issue for a future date.  For this post we want to address the… Continue Reading

MyRA: Is preneed headed in a similar direction?

Posted in Funeral, Preneed, Preneed Development, Preplanning
President Obama used his State of the Union address to unveil a new type of retirement account dubbed “MyRA”.  Recognizing that Americans are woefully unprepared for their retirement years, the President believes the MyRA offers individuals a safe option to induce them to begin saving for those golden years.  A CNBC report provides an explanation… 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 Medicare Tax and QFTs: Don’t look a gift horse in the mouth

Posted in Administration, Preneed, Preneed Tax, Taxes, Trust Funded
 Over the past few years, preneed trust administrators have been wondering whether a Section 685 qualified funeral trust could look to each individual trust’s income and apply the lower tax rates for long term capital gains and qualified dividends.  The issue has taken on more relevance as preneed trusts look to diversify out of fixed… 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