Legislation was introduced this week in the Kansas Legislature, and one of the bill’s changes seeks to clarify how cemetery care fund requirements can be computed. We have found this a source of confusion for cemeteries and regulators in many states. Depending upon the type of interment right purchased, the care fund requirement is often a percentage of the purchase price. The confusion is whether the care fund amount is part of the purchase price, or in addition to the purchase price. Assuming a purchase price of $1,000.00 and Kansas’ 15% care fund percentage, the difference is $22.50. Multiple that amount by the number of sales between audits, and an audit report may conclude that a deficiency of thousands of dollars exists. Or, the cemetery has been over funding the care fund at the expense of operating profits.
If a cemetery opts to set out care fund requirements as an amount that is in addition to the purchase price, their sales documents will need to be consistent with that approach.