I saved this NYT article for a rainy day.  Finding Out Your Power of Attorney Is Powerless describes situations where families had a financial institution reject a power of attorney subsequent to the principal becoming incapacitated with dementia or Alzheimer’s.   My family had a similar experience recently when my mother-in-law had to be admitted to a rehab facility after a nasty fall.  The reality is that financial institutions and hospitals prepare power of attorney forms that build in extra protections for themselves.  If a person has a health care power of attorney and is incapacitated when brought to the hospital, the hospital is not going to reject the patient’s form.  But as the NYT article reports, financial institutions do not hesitate to reject a POA if the client is now incapacitated.  To avoid this situation, the POA principal should take his/her document to the financial institution when he or she still has capacity.  The POA principal can give the bank or brokerage firm a “take it or I leave” demand.  If the bank will not accept and acknowledge that acceptance of the POA in writing, the principal can take his business to a firm that will honor the POA.

In the context of death care, if the POA principal wants to give the agent the authority to direct his/her funeral, then the principal needs to take the POA form to the funeral home.  Not all power of attorney forms include the requisite language for controlling a final disposition.  Depending on the state where the principal resides, the applicable law may require the right of sepulcher language to be in a durable POA, and then either in a health care POA or a financial POA.   So, to avoid the situations described in the NYT article, the POA principal will need to take his/her document to banks, hospitals and funeral homes to ensure those entities will honor the document when it is truly needed.

In the new era of Zoom meetings, the Federal Trade Commission is holding a “public workshop” on September 7th to get further input on Funeral Rule changes that would require funeral homes to post their price lists on line.   The workshop will be televised, and interested parties can watch by using this hyperlink.   Several months ago, the FTC published notice about the workshop and invited industry members and consumer advocates to participate as panelists.  This hyperlink will take readers to the workshop agenda that lists the panelists and the topics to be addressed each hour.   We anticipate that the workshop will be recorded and available for viewing at a later date.  The FTC will accept comments until October 10th, but those comments should only be addressed to specific issues discussed during the workshop. 

A recent Guardian article offers excellent advice to caregivers for individuals with dementia.  The author, Cynthia Dearborn, shared her experiences about caring for a father with vascular dementia.  Cynthia described how her father’s short-term memory became severely impaired, along with his judgment and reasoning skills.  I am having a similar experience with a Transition Plans’ client, who for the purposes of this post I will refer to as Mary. 

I first met Mary thirty years ago when I prepared her first set of estate planning documents.  We kept in contact over the years, and Mary came back into my offices shortly before Covid to review her power of attorney forms.  Some relationships had changed in Mary’s life, and so we put new Transition Plans documents into place for her.   This past December, four years after execution of the most recent powers of attorney, Mary emailed to indicate she would need a new set of power of attorney forms.  When I questioned whether her relationships had changed again, Mary hesitated.  I then forwarded copies of her most recent forms and suggested we get together to discuss whether Mary actually needed new forms.  Mary did come in and we revised her health care power of attorney, but left her financial power of attorney in place.  Two months later, Mary fell down some stairs at a church and broke her arm and leg.  Mary’s attorney in fact then called me for help.  Mary had to be hospitalized and it was discovered that Mary had vascular dementia.  Mary has no family and was completely dependent upon her attorney-in-fact.  The attorney-in-fact was overwhelmed by all of the decisions that had to be made for Mary’s financial affairs and long term care.

As the Guardian article describes, Mary has serious short term memory issues.  She would raise an issue which we would discuss, and then after a few minutes, raise the same issue again.  Mary often became belligerent about changes required for her physical therapy.  The doctors concluded that Mary’s injuries would require months of therapy and would preclude Mary from returning to her home.  Mary aggravated the situation by refusing to follow the doctors’ orders about walking.  Certain issues triggered a foul mood for Mary, and we would have to change the subject when that mood threatened to shut down the discussion.   We quickly concluded that care decisions had to be made without Mary’s input.  As the article suggests, we had to alter our way of communicating with Mary.  

Dementia patients cannot often grasp the issues they face, and consequently, all responsibilities for finances and health care may be thrust upon the caregiver.   In Mary’s case, there were POA forms in force that allowed her attorney-in-fact to make critical decisions about the move to assisted living and the sale of Mary’s house in a timely manner.  Without powers of attorney, a caregiver must go to court for both a conservatorship and guardianship for the authority to make such decisions.

We find the AgingCare website to be a good source information for end of life planning.  The website includes a forum for readers to post questions and offer their experiences.  However, readers need to be careful when the forum is used to seek legal help on end of life issues.  One such topic thread began with a simple question about whether an elder law attorney is needed for a living will.   The first answer started with the appropriate advice, but then went way off course:

Consult an elder lawyer.
A living will may not be required if you have a trust (to avoid all probate). You also require to be her POA as well as MPOA (which you are).
It all depends on what state regulations are….
Don’t wait. If at some point, she requires Medicaid, then the way would be paved.

The advice regarding trusts and POAs is completely wrong.   Living wills, powers of attorney and trusts all have different purposes.  If a parent expresses a desire for a living will, and you’re not sure what its purpose is or how to put one in place, then you should consult an elder law attorney. 

Most of the “Answers” posted to this question were inappropriate and misleading.  One answer recommended a guardianship.  Others recommended a power of attorney.  A health care power of attorney is important to have in place but a living will serve a related, but different purpose.  The living will serves as a written instruction to health care providers if you should become terminally ill, are seriously injured or near the end of life.  The living will is filed with your health care providers so they have instructions when your health care agent is not available.   

One of the weaknesses of Chapter 436, Missouri’s preneed law, is that it provides the State Board few enforcement powers beyond disciplining the preneed seller’s license.  There are plenty of examples of preneed sellers obstructing the State Board’s efforts to obtain preneed records.  At least one resorted to litigation as a delay tactic.  The prospect of having their license put on probation has not been much of a deterrent to some sellers.  Sellers were prepared to play a waiting game with the State Board for a settlement agreement offering a few years of probation.  SB 32 looks to remedy that by providing the State Board the teeth to impose financial penalties on the seller with serious financial deficiencies.

For the seller that obstructs the State Board audit functions, the bill would authorize the Board to require the seller to reimburse the Board’s audit expenses to the Preneed Audit Fund. 

The State Board may also require a seller to pay missing preneed funds back into their trust. 

And third, the State Board may fine a seller up to $10,000, which would be contributed to the Preneed Audit Fund.

With this post we will examine the new “Preneed Audit Fund” that SB32 proposes to create.  Missouri funeral homes are already quite familiar with the state contract fee that was authorized in 2009 by Senate Bill No. 1.  Per that law, the State Board began charging a fee on each preneed contract sold.  That contract fee was created for the sole purpose of funding the State Board’s preneed examination functions.  The fee amount was set by regulation and the State Board initially set the fee at $36.  There were some who thought that NPS had killed off preneed and sales would crater.  But that did not prove to be the case.  The contract fee generated substantial revenues for the State Board, and after a few years the Board lowered the fees charged on licenses issued to funeral directors, embalmers and establishments.  The contract fees were eventually reduced to $25, with more reductions in license fees.  Thirteen years later, the contract fee accounts for most of the State Board’s revenue, but there is very little in preneed protection being provided to the Missouri consumer.

So, SB32 will require the contract fee be deposited to the new “Preneed Audit Fund”, over which the state treasurer controls the purse strings.  The Fund can only be used to reimburse the State Board or the Department of Commerce and Insurance for expenses incurred in a preneed audit, examination or inspection.  The Fund could not be used for expenses such as establishment inspections or discipline proceedings on licenses other than seller, provider or preneed agent.

With our next few posts we will dive deeper into SB32, the Missouri preneed legislation intended to provide the State Board a new audit direction and some new enforcement tools.  Our first issue will be the change in course on preneed audits. 

The bill would amend section 436.470 by adding the following new section:

3.  The board’s financial examination guidelines shall include processes and procedures for determining adequacy of funding of sellers’ preneed obligations, compliance of seller’s handling of consumer funds with this chapter, and compliance of trustees’ administration of preneed trusts with this chapter.

The preneed seller shall provide the following items for each financial examination:

(1)        A listing of all preneed contracts sold during the requested period;

(2)        A listing of all outstanding preneed contracts;

(3)        A listing of all preneed contracts cancelled or transferred during the requested period;

(4)        A report from each financial institution and insurance company utilized by the seller that shows as of the examination date each active consumer name, account number, start date, contract purchase price, amount received, amount on deposit, the account fair market value or insurance death benefit;

(5)        Copies of preneed contract forms currently being used;

(6)        A copy of the trust agreement(s) with the trustee(s); 

(7)        A copy of all agreements with providers or preneed agents;

(8)        Trustee transaction statements for periods designated by the board’s financial examiners or department of commerce and insurance designee; and

(9)        Any other report or document related to the administration of the seller’s preneed trust that may be requested

The introductory paragraph establishes that State Board audit procedures are to focus on three things: 1) the adequacy of the seller’s preneed funding, 2) the seller’s handling of consumer funds, and 3) the trustee’s administration of seller trusts. 

With regard to the adequacy of the seller’s preneed funding, the State Board will need either trust statements or insurance in force statements.  This will involve a comparison of the trust assets’ fair market value to the cost to perform the seller’s outstanding preneed contracts.  None of that argument about comparing trust cost basis to the refund obligation if all contracts canceled on the same day. 

With regard to the seller’s handling of consumer funds, the State Board needs either trust transaction statements or insurance company reports that reflect when the seller deposited consumer funds.  The State Board needs to confirm sellers are depositing all consumer funds within 60 days of their receipt.

Third, the State Board will need trustee statements to determine fiduciary compliance with the distribution of origination fees, sales expense fees, trust expenses, cancellation distributions, performance distributions and any other seller distributions.  When trustees make excess income distributions under the prior law, is there documentation to confirm the compliance of that distribution?  Are trust expense distributions for administrative services provided by a firm independent of the seller?  How are performance and cancellation distributions computed?  How are sales expense and origination fees computed?

We already know the objections that will be raised against this pivot in direction because they were raised in 2017 when the State Board’s exam committee made recommendations to begin tracking the consumers’ funds.  No, requiring supporting documentation from banks and insurance companies will not be burdensome when the State Board employs sampling when testing for compliance by sellers and trustees.  What we wrote in November 2017 remains true today (Missouri’s Preneed Examination Process: A New Focus)

It would seem that the Missouri Legislature has grown impatient with the funeral industry’s efforts to regulate preneed.  New legislation, Senate Bill No. 32, would establish a two tier approach to preneed oversight.  This law would create a threshold whereby the State Board of Embalmers and Funeral Directors would be required to notify the Department of Commerce and Insurance when examinations find preneed sellers with substantial financial deficiencies or discrepancies.  Once the notification requirement is triggered, the State Board must regularly update the Department with the progress of the examination and the resolution of the seller’s financial deficiencies.  If the Department should become concerned about the Board’s lack of progress or the resolution of funding the deficiency, the Department could designate one of its agencies to either assist the State Board or assume control of the examination.  The bill’s intent seems to want to provide a check and balance to ensure that preneed examinations are done completely, accurately, efficiently and without the appearance of impropriety.

This coming August will be the 14th anniversary of the passage of Senate Bill No. 1.  That law gave the State Board the authority, and obligation, to conduct a preneed examination on each preneed seller once each five years.  By the Legislature’s time table, the State Board should be finishing the second round of examinations and preparing for phase 3.  However, the State Board has yet to adopt examination procedures for tracking consumer payments.  The State Board’s phase 1 and 2 preneed examinations focused on preneed contract compliance.  Those examinations did not seek bank or insurance reports to test for timely deposit of consumer payments.  Nor did the examinations review fiduciary distributions made to preneed sellers.  

In late 2017, I and a handful of preneed sellers began to press the State Board to begin discussions for the phase 2 preneed examinations.  The preneed sellers in favor of new examination procedures were victims of National Prearranged Services.  Some Board members were in favor of a pivot in the direction of preneed examinations, but a majority of the Board members were swayed by certain industry representatives’ recommendation to stay the course.   They suggested it would not be fair to funeral homes if the exam procedures were changed. 

The October 2021 sacking of the State Board and its staff caught the Legislature’s attention.  The 2021 State Board had found problems with the investigative unit from the Division of Professional Registration, and took actions to hire its own investigators.   The termination of the Board’s preneed exam supervisor raised questions whether the Division was protecting a preneed seller.   A year and half has passed and there are no signs that the new State Board has taken actions with regard to preneed sellers known to have serious problems.

The Bill would also introduce new features such as a “Preneed Audit Fund” and State Board authority to either fine preneed sellers or require the repayment of missing consumer funds.   We will explore these new features in a future post.

The current shortage of qualified workers has caught up with the death care industry.  Funeral home owners are finding it difficult to fill open positions.  Salary demands are rising, and industries competing for death care workers can offer perks that funeral homes find difficult to match.   While the death care industry has been notorious for having long hours and low pay, some in the industry instead blame licensing standards.  The Missouri funeral directors association has taken that bait and proposed legislation that would eliminate testing for the licensure of funeral directors and embalmers.  SB348 would instead authorize licensure through apprenticeships.    Missouri is one of those states with low education standards for death care licenses and no continuing education requirements.   So, the legislation would further lower the bar by eliminating testing.  A Missouri FD license would not go very far in assuring employers that an applicant is “qualified”.   The prospective employee’s training would only be as good as the individual that supervised his or her apprenticeship.   This would seem to cement, at least for Missouri, that funeral directing is more a trade than a profession.

Most of industry leaders, including the NFDA, seem resigned to the reality that the Funeral Rule will be amended to require the posting of price lists on funeral home websites in some form or fashion. But the FTC extension of the comment deadline from January 3rd to January 17th indicates the Commission does value input from funeral directors.  Consequently, we recommend that funeral directors take the opportunity to address the issues they may still influence by filing comments with the FTC.

One issue that seems to resonate with both funeral directors and the Commission is the need to define when the obligation to provide a price list is triggered.  One Commissioner provided comments at the end of the October 20th open hearing to state that the FTC staff agreed that the current Rule does not require the price list production until pricing is raised.  Comments from funeral directors about the confusion when disclosure is required should help prompt the FTC to clarify when the GPL must be handed out.

Funeral directors should also offer comments about the need for flexibility in how price lists may be delivered to the on-line shopper.  As we previously posted on our blog, funeral homes should be given the option of providing price lists by electronic deliveries other than posting on a website.  Funeral homes should expect that they will be required to disclose on their websites the availability of price lists by electronic delivery when requests are made by email or telephone calls.  If FTC should take this approach, then funeral homes should expect requirements for when requests must be complied with.  If this type of flexibility is important to you, then we recommend you file a comment with the FTC.

With regard to the disclosure of third party charges such as crematory fees and cemetery interment charges, funeral directors need to comment on the burden this would create when forced to update GPLs multiple times during a year.   

You may follow this hyperlink to file your comments to the propose Funeral Rule changes.