Search the internet for “cemetery” and “friends of” and you will find a number of independent maintenance associations.  We’re not referring to Facebook groups that organize volunteer events for an abandoned cemetery, but rather we want to highlight those formal organizations established to provide continuing financial assistance to an active cemetery.

As a cemetery nears its capacity, revenues from lot sales and interment services will decline.  Most cemeteries are already experiencing revenue declines because of the public’s embrace of cremation.  Declining revenues require cuts to the cemetery’s maintenance budget.  This situation has led some of our cemetery clients to convert to tax exempt status so they may seek donations from prominent individuals with family buried in the cemetery.   However, caring families are frequently taking an independent route by forming their own maintenance association.

Established by descendants of cemetery lot owners, an independent maintenance association may have an agenda that differs from that of the cemetery board.  While the cemetery board may be focused on keeping the grass cut and the roads in repair, the independent maintenance association may want the chapel renovated, the mausoleum roof repaired or historic markers replaced.  Not wanting their donations diverted to general cemetery needs, the independent maintenance association retains control over its own budget or trust.  The association can also steer clear of trust distribution constraints that may be imposed by state law on the cemetery endowed care trust.

To achieve its own tax exempt status (so that donations are deductible), the independent maintenance association must qualify with the IRS as either a Section 501(c)(3) charity or a Section 501(c)(13) cemetery company.  Implicit in this approval is that association also be formed under state law as a company or association.   Costs will be incurred with both the formation of the company and the IRS filing.

The following hyperlink will take you to the Perservation and Enhancement Fund page of Mount Olivet Cemetery in Frederick, Maryland.  This page provides history of their ‘friends/preservation’ association and the challenges of preserving their garden cemetery.  The page provides a valuable marketing tool in seeking donations.

The independent maintenance association is not a friend that is available to the for-profit cemetery.  The tax exempt status precludes the association from providing maintenance assistance that is otherwise required from a for profit company.  For cemeteries with a mausoleum in need of repairs, we have seen the mausoleum being transferred to a new 501(c)(13) company.  Future crypt sales provide revenue for mausoleum repairs, and the independent maintenance association is then formed to help subsidize repairs and future upkeep.

A festering dispute between Missouri’s State Funeral Board and funeral directors association came to a head in a public conference call today.    The State Board scheduled the meeting in response to  its parent agency (the Division of Professional Registration) blocking the Board’s hiring of an investigator.  The Board held the meeting to discuss what actions should be taken to clarify its authority to hire and retain inspectors and investigators.  When the Board discussed the possibility of requesting an Attorney General opinion, the MFDEA raised the spectre of a 2015 Supreme Court decision and warned the Board to be careful about ‘what it asks for’.   The association went on to declare that it  had warned the Board against having inspectors taking pictures during funeral home inspections.

This dispute began in the fall of 2020 when Division of Professional Registration sought to require the State Board to use investigators from its central investigation unit.  The State Board acquiesced to that request but instructed those investigators to take pictures of inspection sites so that the Board and staff could instruct the investigators what to look for.  That practice led the association to make accusations of a ‘gottcha practice’ where funeral homes would be cited for infractions based on the photographs.   The Board and association went back and forth on whether funeral homes were actually complaining about the practice.  It was our understanding that no funeral home had actually been threatened with discipline for an infraction discovered through a photograph.

But, this controversy is a blunder of the Division’s making.  More than 40 years ago, the Missouri Attorney General’s office opined that the Division of Professional Registration does not have the authority to employ, or prohibit the employment of, investigators or inspectors of certain state boards.  (MO 55-80) That opinion involved a challenge from the Missouri Dental Board, which relies on the same enabling statute that authorizes the Missouri State Funeral Board’s  employment of investigators.  (Section 324.001.11(4))  Doesn’t the Division have a legal staff to vet these types of issues?  Granted, association members may have egged the Division on about gottcha practices, but ultimately, the State Board should have been given proper latitude to fulfill its responsibilities to the funeral consumers.  If the State Board wants to hire its own investigators, Missouri law gives that authority to the Board, not the Division.

Two consumer groups recently issued failing grades to funeral regulators from 33 states.  Taking the position that state funeral regulators have a duty to serve both professionals and consumers, The Funeral Consumer Alliance and the Consumer Federation of America worked together in evaluating each regulator’s website on the following criteria:

  1. The inclusion of a prominent link to consumer-focused information.
  2. An explanation of a consumer’s basic rights under the Federal Trade Commission’s “Funeral Rule.”
  3. An explanation of a consumer’s rights when buying a prepaid funeral.
  4. Other information about how consumers can optimize their purchase of funeral services, including links to the FTC website or publications on “Shopping for Funeral Services”.
  5. A prominent link for consumers wanting to file a complaint.
  6. The ability to see whether a funeral home has been subject to disciplinary action by the regulatory body.

In a report titled “An Evaluation of Consumer Information Provided by State Funeral Regulators”, these consumer groups found that most regulatory websites focus exclusively on educating funeral licensees.  The report includes recommendations to those state funeral regulators who need to do a better job educating the public.  These consumer groups also offer this brochure for funeral consumers.

We believe three fiduciary powers are crucial to reviving cemetery care funds: investment diversification, unitrust elections and the power to adjust.  It has been more than 12 years since we first posted about the need to repair cemetery care funds (Cemetery Endowed Care Funds and the Fixed Income Investment).  That post touched on all three of the aforementioned powers.  We made that post when Missouri was considering legislation that would authorize diversification and unitrust elections for a very small subset of Missouri cemeteries.  The legislation only benefited Missouri cemeteries that were licensed as endowed care cemeteries.  Cemeteries operated by cities, counties, churches and associations were left out.  (As explained in a May 2020 post, less than 10% of Missouri cemeteries are licensed.)  The legislation also gave the unitrust election to cemetery operators rather than care fund fiduciaries.  Perhaps out a fear that fiduciaries would override the operator’s unitrust election, the bill took away the fiduciary’s power to adjust.  Oddly, the legislation did not include safeguards for the care fund principal or corpus when the operator takes the unitrust election.  After 12 years, it’s time for Missouri to fix its cemetery care funds.

First up, all care fund fiduciaries should be granted the authority to diversify trust assets.  Missouri’s 2009 Chapter 214 legislation did not address investment restrictions imposed on county and municipal care funds.  Eight years later, legislation finally authorized care fund diversification for counties, but did not address city owned cemeteries.  Today, Missouri cities still face very restrictive investment guidelines for their cemetery care funds.  Missouri is not the only state to impose antiquated investment restrictions on government operated cemeteries.  Without productive care funds, cities are forced to spend scarce tax revenues on cemetery maintenance.

We made numerous posts over the past dozen years about the historic dependency of cemetery care funds on interest income, and the need for those trusts to pivot to total return trusts and the prudent investor rule.  The unitrust election is essential to converting the care fund trust from an income trust to a total return trust.  In prior posts we’ve discussed how exempt cemeteries (or states without a cemetery unitrust provision) can explore their state trust code for a unitrust provision (or power to adjust provision) for authority to make fixed distributions.  By including express authority in their cemetery laws, states would assure care fund fiduciaries in making fixed distributions when trust assets can be adequately diversified.  But we believe the unitrust election should be the fiduciary’s to make, not the operator.   We understand the regulators’ concern about fixed distributions made from small care funds.  Without a master trust, small care funds may be challenged to adequately diversify.  Accordingly, cemetery laws need to guard against corpus invasion.

Finally, care fund fiduciaries need the power to adjust principal and income.  Unitrust laws generally allow for a fixed distribution range of 3 to 5% of the fund’s fair market value.  Our clients are generally conservative by opting for a 3% distribution.  When the care fund consistently exceeds its 3% distribution rate, cemeteries and trustees need the flexibility to make additional distributions from accrued value increases.   If the care fund performance does not consistently match the fixed distribution rate, the trustee needs the power to adjust the distribution rate to below 3%.   This power would also equip the fiduciary to make extraordinary distributions when the cemetery needs major repairs.

Without these three powers, care fund fiduciaries are deprived the tools to efficiently administer care funds.  When the care fund is underutilized, cemeteries are more likely to fall into disrepair, and eventually, require taxpayer support.

In a recent Washington Post article, supporters of a Lost Cause monument unsuccessfully argued to have a Confederate statue moved from a county courthouse steps to a local cemetery.  The article sets out some of the counter-challenge arguments we described in our prior post.  But eventually the small community of Isle of Wright rejected a recommendation that the Lost Cause monument be relocated to their city cemetery.  Although a cemetery lot owner had offered to donate spaces for the relocation of the statue, the county Board of Supervisors did not feel the monument should remain on property supported by tax dollars.

A historian quoted by the article suggested that the relocation of Lost Cause monuments from public property to cemeteries “seems to only kick the can down the road”.   We agree.   A cemetery is to be a place of tranquility where relatives and friends of the deceased may come to visit for emotional comfort.   Cemetery visitors should not have to shield their eyes from a section of the cemetery as part of a compromise to a false narrative of history.

While the greater public sentiment has turned against statues honoring the Confederacy, cemetery operators should anticipate a counter-challenge to the removal of a Lost Cause monument.  Support for the Lost Cause monument can be just as fervent as the calls for its removal.  With emotions running high in both directions, the removal of the Lost Cause monument should be anchored firmly to cemetery governing documents.  If those documents are ambiguous, the cemetery should first address those weaknesses.

As noted in our prior post, it is universally accepted that a cemetery may amend its rules and regulations to apply retrospectively to existing burial lot owners.  If the rules and regulations do not include an offensive monument provision, one should be added.   The offensive monument provision should include notice procedures where the burial lot owner is not known or uncertain.  Please recall that Lost Cause monuments were often erected on lots purchased by, or gifted to, Confederate memorial societies that no longer exist.  When the lot owner is known, he/she should be given the opportunity to remove the monument.   The rules should authorize the cemetery to proceed with removal when the lot owner does not comply.  When the lot owner is not known or is uncertain, the removal provisions could call for publication notice that allows for interested third parties to accept removal of the Lost Cause monument.  Under those circumstances, the cemetery may want to consider an indemnity provision from any party seeking to assume possession of the monument.   If there are no takers for the Lost Cause monument, the rules should authorize the destruction of the monument without liability to the burial lot owner or anyone claiming an interest in either the lot or the monument.

When rules and regulations need to be amended to include an offensive monument provision, the cemetery should also address ambiguities concerning the limited rights acquired with the purchase of a burial lot.  The rules and regulations (and burial contract and IR assignment form if necessary) should clearly state that ownership of a burial lot conveys only the right to inter human remains and to memorialize that individual.  The rules should also set out the procedures and requirements for transfers of burial lots.

Lost Cause monument supporters will likely argue that the statue’s removal amounts to a violation of private property rights and free speech.  That is an argument erroneously based on fee simple property rights.  Cemetery governing documents should clearly refute that misconception.  Burial lot owners have limited rights.

Lost Cause supporters may also assert that a Confederate monument should be retained to honor history and valiant soldiers.  That ignores that the Lost Cause is a false narrative and Lost Cause monuments were typically erected without specific reference to a fallen soldier.  The reality is that such monuments are a violation of a cemetery’s purpose, and it was a mistake to allow them in the first place.   It is time to correct that mistake.

If a racial justice challenge is made against a Lost Cause monument, the cemetery’s regulations typically vest authority in the cemetery to remove monuments deemed offensive.   Through their rules and regulations, cemeteries reserve the authority to deem what is, or is not, offensive.  The following were taken from cemetery websites found through a Google search (cemetery regulations monument offensive):

  •  Removal of offensive structures, etc.  If any monument, effigy, or other structure placed upon any burial unit shall be determined to be improper or offensive by the cemetery, it shall be the right and duty of the cemetery to remove such structures in accord with the terms of notice given by the cemetery.
  • If any Memorial, structure, or any inscription to be placed on same, or any embellishment whatsoever, shall be determined by the Cemetery, upon inspection, to be offensive or improper, the Cemetery reserves and shall have the right to (a) refuse to authorize the placement of such Memorial or object; or (b) if already in place, the Cemetery shall have the right, at the Owner’s expense, to remove, change or correct any such offensive or improper Memorial, object or inscription.
  • Items judged by management to be unsightly, offensive, weathered, out of compliance with regulations, hazardous, a hindrance to maintenance or inappropriate for a sacred place.
  • Section 8.05  Offensive Objects   If any marker, effigy, structure, improvement of the object whatsoever, or any inscription be placed in or upon any lot which may be determined by the Director of Cemeteries to be offensive or injurious to the appearance of the surrounding lots or grounds, the Director or his authorized representatives shall have the right to enter upon such lot and to conceal such offensive object. The Department of Cemeteries will attempt to notify lot owners when an offensive object has been placed on their lot with or without their knowledge to provide them with the opportunity to correct the offensive condition. If lot owners have been notified of offensive conditions but fail to correct those conditions in the time specified by the notification, any charges for removal of offensive objects will be billed against the lot.

Recall from our first post (The Confederate Dilemma) that the Forest Hill spokesman state their Lost Cause monument was protected as “an expression of free speech of a private party”.  Cemetery regulations such as the above preclude the argument that the burial lot owner has freedom of speech to erect any form of monument or memorial on his/her burial lot.  Regardless of whether the monument is meant to memorialize an individual or a cause, the cemetery may remove the monument if it deems the monument offensive to the families of other lot owners or inappropriate for the decorum sought by the cemetery.

A cemetery’s governing documents generally reserve the right to amend the rules and regulations and bind existing lot owners to those changes.  The following is an excerpt from The Cemetery Lot: Rights and Restrictions:

If a cemetery is to be a place of tranquility suitable for relatives of the deceased to visit in their desire to ease the emotional shock of death and to show respect for the dead, it seems necessary that the governing body of the cemetery have the power to promulgate and enforce rules regulating monuments, decoration of graves, and other aspects of the cemetery’s operations.  … In other areas of the law, courts have generally refused to permit one party to make changes in a contract or to reserve the right to do so.  But in recognition of the unique character of a cemetery lot, courts have modified the usual law of contracts and permitted the governing body to promulgate and enforce reasonable new or changed rules against prior purchasers.  (See pages 383 and 384 for omitted citation)

If necessary, cemeteries should update their rules and regulations to clarify their authority to address offensive monuments.

In our next post about the Lost Cause monument, we’ll look at the possibility of a counter-challenge.

Cemeteries that contain a Lost Cause monument are the most susceptible to a racial justice challenge.  For purposes of our posts, a Lost Cause monument is a Confederate statue or obelisk erected between 1890 and 1920.  As discussed in this attached article, Confederate memorial societies actively erected Lost Cause monuments during that period, with obelisks and statues being the favorite forms of monument.

Frequently, a memorial society such as the United Daughters of the Confederacy would purchase a lot without intent to make a burial.   The Lost Cause monument would be erected on the empty lot for the purpose of serving as the focal point of future Confederate memorial day services.   These monuments often refer generally to the Confederate dead or the Confederacy.   When erected on an empty burial lot, the monument is memorializing a cause.  For the cemetery, this most likely is a violation of its governing documents.  From recorded garden plats to the rules and regulations, cemetery governing documents restrict the use of a burial lot to the interment of human remains and the memorialization of that person.  The October 2020 Kansas City Star article referenced in our prior post describes three such Lost Cause monuments.

Fairview Cemetery in Liberty has a 20 foot obelisk and statue erected in 1904 by the United Confederate Veterans.  The monument did not reference a specific soldier, but rather the “honor of the confederate soldiers of Clay County”.  We would assume the cemetery’s lot book is silent on any burial to the lot because the city has initiated a legal proceeding to revest ownership of the lot.  Missouri law permits the revesting of a lot’s ownership when no burial has been made to the lot within 50 years of its sale.

Forest Hill Cemetery’s Lost Cause monument is a 40+ foot tall obelisk and statute erected by the United Daughters of the Confederacy in 1902.  That monument’s history is provided in this attached article.   As the article explains, the cemetery donated lots for the remains of Confederate soldiers to be relocated to Forest Hill.  So, the cemetery probably also donated the lot(s) used for the Lost Cause monument.

The Lost Cause monument in Woodlawn Cemetery (Independence) is a 20 foot obelisk erected in 1924 by the United Daughters of the Confederacy.  It too has a generic reference to “The Memory of the Soldiers of the Confederacy”.  The following hyperlink is to a webpage about that monument.

While there could be push back to any memorial referencing the Confederacy, a memorial to a soldier buried in the lot at least complies with governing cemetery documents’ burial requirement.  A challenge must then be based on whether the memorial complies with the cemetery’s monument regulations.  But for a Lost Cause monument, the cemetery could face a legal challenge that by allowing the monument to be maintained the cemetery is violating its own governing documents.

In our next post we will look at the role a cemetery’s rules and regulations may play in a racial justice challenge.

A cemetery may not be where one would expect to find the racial justice movement, but several Kansas City area cemeteries have been challenged about Confederate monuments found within their boundaries.  An October 2020 Kansas City Star article reported on Fairview Cemetery in Liberty, Forest Hill & Calvary Cemetery in south Kansas City and Union Cemetery near downtown Kansas City.  Each of these cemeteries responded differently to their racial justice challenge, and for the City of Liberty, the dispute continues to intensify.  The Confederate monument dilemma may be more common in the Midwest and the South than most realize.  As the Star article reports, several other Kansas City area cemeteries also contain Confederate memorials.

When challenged, cemeteries do not want to be caught flat-footed like Forest Hill & Calvary Cemetery.  Forest Hill is located within a black community and has one of the area’s larger obelisk monuments dedicated during the “Lost Cause” movement of the late nineteenth and early twentieth centuries.  The cemetery, owned by a national company, turned to its “reputation management” department for a written response:

… the [owner], wishes the monument were gone. Were it up to the company, the sanctity of the individual Confederate graves, marked with the letters CSA, for Confederate States of America, would be preserved.  But the monument erected in 1902 “In Memory of Our Confederate Dead” would go.  …. Unfortunately, this is an expression of free speech of a private party.   Had this monument been erected in a common easement, we would have already removed the statue.

The problem with this response is that there is no right of free speech that accompanies the purchase of a grave space.  Cemeteries reserve the right to regulate decorations, markers and monuments to maintain the decorum of the cemetery and avoid offense to families that come to visit their relatives’ graves.   A national company knows very well that a grave purchase conveys limited property rights, and not a fee simple estate.  To suggest otherwise fuels the misconception among lot owners that that may do what they wish with their lot.  While the ‘freedom of speech on private property’ defense may seem to a quick way to neutralize a racial justice challenge, it can easily be proven as disingenuous, and harmful to the cemetery’s reputation.

In our next post we will address the first step in preparing a response to the Confederate dilemma: distinguishing a memorial to a dead soldier from the Lost Cause monument.

For years, Illinois law has prohibited funeral homes from being named as beneficiaries to consumers’ life insurance policies.  In response to frauds committed by National Prearranged Services (NPS), many states amended their preneed laws to prohibit life insurance ownership by a funeral home.  NPS had structured its preneed program as owner of insurance policies sold to preneed consumers.   Then as owner, NPS borrowed and surrendered policies without consumer or funeral home knowledge.  Illinois took its restrictions further by barring the funeral home from being made beneficiary of a life insurance policy.

But the Illinois beneficiary prohibition has proved problematic for the consumer seeking to qualify for public assistance.  Typically, consumers will exclude life insurance surrender values from their assets by assigning the policy’s beneficial rights as consideration for a preneed contract.  The Illinois law precluded this and consumers resorted to third party trustees to qualify for public assistance.   That solution was cumbersome, and added costs to the consumer.

A bill was introduced in the Illinois Legislature this session to resolve this problem.  HB295 provides a structure for consumers to assign all or a portion of their life insurance to a funeral home in exchange for a guaranteed preneed contract.  The bill seems well thought through from both the consumer side and the funeral industry side.  However, we understand that cemetery representatives have voiced late opposition to the bill.    From a quick read of the bill, one could conclude the assignment is limited to funeral homes.  However, the bill clearly allows for assignments for cemetery merchandise and services.  To weigh the validity of their opposition, the cemetery representatives need to make their criticism public.