This post will look at the first allegation made by the Missouri State Board of Embalmers and Funeral Directors against the Missouri Funeral Trust: MFT does not create or maintain any records of its activities as a preneed seller. In subsequent paragraphs of the Complaint, the State Board will also challenge the adequacy of those records produced for the financial examination. But, the “no records” allegation has been made to bolster a subsequent claim that MFT is failing to perform the duties required of a preneed seller by Chapter 436.
MFT obviously has preneed records, but the Complaint asserts that those records are created and maintained by Eagle Bank as MFT’s trustee. The Complaint suggests that there is no agreement between MFT and its trustee addressing whether the trustee has assumed the preneed seller’s recordkeeping obligations under Chapter 436. In the absence of an administration agreement or an agency agreement, the Board seems to be suggesting that the MFT cannot offer the trustee’s records for seller’s compliance with Chapter 436.
We do not interpret Chapter 436 to prohibit a seller from delegating preneed recordkeeping functions to a trustee, or to an administrative firm. It may also be fairly common for state association preneed programs to define funeral homes as agents for specific seller record keeping functions. Accordingly, this allegation could probably be resolved with one or more agreements that specifically set out each party’s recordkeeping functions.
We have encountered funeral homes taking a similar record keeping approach towards insurance funded contracts. Some funeral homes erroneously view the insurance company as the preneed seller, and as having the duty to provide all necessary reports. The insurance carriers appreciate the need to assist funeral homes in creating records and preparing annual reports, but the funeral home, not the insurance company, is the seller of the preneed contract. If the insurance reports are not adequate, it will be the funeral home, not the insurance company that will be disciplined.
We would not be surprised to see the State Board staff propose a record keeping provision that mandates the seller maintain all preneed records at its offices. While such a requirement could prove burdensome to MFT, it may have minimal impact funeral homes that are licensed as both seller and provider.