Death Care Law Blog : Kansas Death Care and Preneed Lawyer & Attorney : Stalter Legal Services Law Firm : Funeral Law, Elder Law : Kansas City

For the past fifteen years or so, Missouri cemeteries could sell markers and memorials on a preneed basis without making delivery of the marker, or depositing purchaser payments into a trust. RSMo. Section 214.387 authorized cemeteries to use a segregated account to hold an amount equal to 110% of the marker’s wholesale cost. If the purchaser did not want the marker delivered, the cemetery could set up a bank account to hold the required amount. The procedure was easier and cheaper than establishing a trust account. But, the cemetery’s authority to use the segregated account came to an end on August 28th with the effective date of SB296.

If delivery is not made within a “reasonable time”, the cemetery must now deposit 80% of a purchaser’s payments on cemetery merchandise (including markers) to a trust account or an escrow account.

The elimination of the segregated account also had theunintended consequence of subjecting the preneed cemetery merchandise sales to the jurisdiction of the Missouri State Board of Embalmers and Funeral Directors.

To the extent cemeteries are subject to licensure by the Office of Endowed Care Cemeteries, the State Board has tentatively approved an emergency rule that exempts preneed merchandise sales that are made in conjunction with a burial space with endowed care. Ostensibly, cemeteries that are either non-endowed (or exempt from Chapter 214 licensure) would be subject to Chapter 436 if they sell merchandise on a preneed basis.
 

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When Missouri’s Chapter 436/NPS reform legislation began to take shape last summer, the state’s cemetery industry sought to get out of the train’s way by incorporating new preneed provisions into a Chapter 214 bill. To clarify that cemeteries could establish preneed programs that would be regulated exclusively under Chapter 214, and not Chapter 436, statutory exceptions were drafted into Senate Bill 1 not once, but twice. To add a belt to those suspenders, a statutory exception for cemeteries was also drafted into the Chapter 214 bill. But alas, there has been a small slip between the cusp and the lips.

SB1’s two ‘cemetery exemptions’ are found at Section 333.310 and Section 436.410. Section 333.310 was intended to exempt cemeteries from the State Funeral Board jurisdiction and Section 436.410 was intended to exempt cemeteries from Chapter 436.

333.310 The provisions of sections 333.310 to 333.340 shall not apply to a cemetery operator who sells contracts or arrangements for services for which payments received by, or on behalf of, the purchaser are required to be placed in an endowed care fund or for which a deposit into a segregated account is required under chapter 214, RSMo; provided that a cemetery operator shall comply with sections 333.310 to 333.340 if the contract or arrangement sold by the operator includes services that may only be provided by a licensed funeral director or embalmer.

436.410. The provisions of sections 436.400 to 436.520 shall not apply to any contract or other arrangement sold by a cemetery operator for which payments received by or on behalf of the purchaser are required to be placed in an endowed care fund or for which a deposit into a segregated account is required under chapter 214, RSMo; provided that a cemetery operator shall comply with sections 436.400 to 436.520 if the contract or arrangement sold by the operator includes services that may only be provided by a licensed funeral director or embalmer.

Both exemptions define a cemetery preneed arrangement where the purchaser’s payments must be deposited to an endowed care fund or a segregated account. One problem with this is that endowed care trusts cannot be used for preneed payments. A second problem is that the segregated account arrangement was eliminated from the final version of SB296. The Missouri cemetery industry’s last chance for a statutory exemption, a new Section 214.320.5, fell victim to a last minute deletion from SB296.

Missouri cemeteries now face an uncertain future with a new Chapter 436, and an expanded Chapter 333.

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At the risk of plagiarizing the Missouri Funeral Directors and Embalmers Association, Missouri preneed funeral sellers, providers, fiduciaries and insurers face a new ballgame that will begin August 29th without a complete set of rules and guidelines. Funeral directors have a general idea where the game will be played, but they’re not quite sure what rules the umpires will use or how closely the game will be called.

In contrast, Missouri’s cemetery industry has been left to guess where their game will be played. Through last minute changes, the cemetery bill was pared back to those essential provisions required to authorize trust-funded preneed sales and a fixed-distribution provision for endowed care trusts. The resulting provisions do not begin to tell the underlying issues.

Funeral directors get the first crack at learning their new ‘rules’ on May 28th when the MFDEA sponsors a session with the Chapter 436 umpires. Based on the success of that session, one of the 436 umpires (the State Board) will probably explore regional meetings with funeral homes.

In the meantime, Missouri’s cemeteries will need to regroup in an effort to work out a consensus on preneed and endowed care legislation.

For a copy of the changes to Chapter 436 click here, and for Chapter 214 changes click here.

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