While the completion of the document may have felt like a birthing process to the staff of Missouri’s Division of Professional Registration, the Chapter 436 Working Group Recommendations more accurately reflects an industry position paper that has yet to be completed. Faced with a deadline imposed by the Missouri legislature, the Division ‘finalized’ the Recommendations in an 11th hour meeting of the State Board of Embalmers and Funeral Directors. The State Board meeting underscored that many industry members have yet to grasp how the preneed transaction is structured and administered by competitors. This is best demonstrated by the State Board vote to revise the Recommendations to include the following:
· The board recommended a 100% trusting requirement with no administrative or trustee expenses by a vote of 4-2.
During various meetings, the issues of preneed sales expenses and trustee administration expenses having been erroneously interchanged by Committee members. This confusion is due in part from Chapter 436 allowing all income to be distributed currently. If the trust does not accrue income, the law requires the seller to assume responsibility for trust expenses. Trustees normally look to trust income for administrative expenses. If the trust has no income, the trustee is dependent upon the seller for reimbursement. This aspect compromises the fiduciary’s duty to the trust. By its action, the State Board would perpetuate a major flaw in Chapter 436 (if trust funding is to survive at all).
The State Board’s objective is to protect the consumer, and to do so it must think comprehensively about the three forms of funding: insurance, joint accounts and trusts. Is the consumer better served if trust funding is effectively precluded? Of course not.