Paragraph 26c of the Complaint filed by the Missouri State Board of Embalmers and Funeral Directors alleges that the Missouri Funeral Trust fails to maintain “records regarding the insurance policies for insurance funded preneed contracts….”  We suspect this claim may be directed at a practice where the MFT trustee has accommodated funeral homes that have been “assigned” insurance policies in a spend down situation.  Funeral homes in both Illinois and Missouri have made similar requests of our client banks.  However, we routinely advise our client banks from accepting such arrangements because of several potential compliance issues, including recordkeeping.

Other than the prohibition of term life insurance, Missouri’s Chapter 436 does not offer guidance to a preneed trustee that accepts insurance policies or annuities.  Accordingly, it becomes incumbent upon the seller and the trustee to define the fiduciary duties of the bank, and consumer contracts would need to be consistent with the trust agreement.

As with some of the prior allegations made against the MFT, this issue is one that can be remedied with the appropriate agreements and documents.