In a post made June 30th, we discussed how the strategy behind the Wisconsin settlement proposal makes sense. But, a significant percentage of funeral homes have yet to sign on to the settlement. In terms of the Master Trust’s liabilities to consumers, funeral homes with 30% of those contracts are holding out. While both the Receiver and the WFDA’s attorney are putting a positive spin on the situation, the Receiver has gone public through his website to further pressure the dissenting funeral homes. Stressing consumer protection, the Receiver’s website lists the funeral homes that have, and have not, accepted the settlement and explains that:
Under this agreement, funeral homes that sign the settlement will ensure that their customers receive the benefits promised them under their burial agreements and, in exchange, will be protected from possible further court action.
An implicit message that can be taken from this statement is that a dissenting funeral home is not willing to promise that their customers will receive the benefits promised them under the burial contracts. For most funeral directors, it is not a matter of keeping their commitment to the consumers. Accordingly, we can’t help but wonder whether some of the dissenting funeral homes are expressing the same concerns raised by IFDA funeral homes regarding the settlement agreement brokered by Merrill Lynch.
Yes, the funeral homes wanted to recover as much in damages as they could, but they did not trust Merrill Lynch to find a way out of the hole it had created. Merrill Lynch did not want to be trustee of the IFDA master trust, and that was more than apparent to many Illinois funeral homes.
The Wisconsin law that restricts preneed funeral trusts to depository accounts cuts both ways for the Receiver. While it provides a clear standard for holding fund managers and fiduciaries in breach of their duties, the law also restricts the Receiver’s options for improving the WMT’s investment performance. What the Wisconsin Master Trust needs is legislation to expand the permissible investments for preneed trusts, but the Receiver’s job description does not include being a lobbyist for the WMT.
Several factors make it difficult for the WFDA to sponsor such legislation, and as a result, some funeral homes may rather ‘bail’ out of the situation.