Small town funeral homes often lack the volume of business to warrant a ‘preneed program’. And, if there is no competition, why hassle with the costs of preneed compliance. The short answer is reputation and integrity.

A recent article about an Iowa funeral director suggests the operator may have only handled a hand full of preneed transactions a year. But rather than establish a trust, he placed the consumer’s funds in the funeral home’s operating account. Insurance policies were also handled improperly.

These ‘issues’ began to surface with the annual report filed with the Iowa preneed regulator a year ago. The next annual report suggested further problems, and now the operator must pay a civil penalty of $2,500, bear the expense of a CPA audit and a new trust. This is a stiff penalty for a small business, but not such that would put the operator out of business. As the comments to the article suggest, the greater hit could be to the operator’s reputation.