In paragraphs 53 through 71 of the MFT Complaint, the State Board sets out certain duties that only a licensed Missouri preneed seller may perform. The Complaint asserts that these seller duties are either being performed by the funeral homes that contract to be ‘providers’ with the MFT, or by Eagle Bank as trustee for the MFT. In essence, the State Board is arguing that the MFT is a sham seller.
Many business organizations transact through agents, but the Complaint asserts that, per the provider agreements, the funeral homes are not agents of MFT. We can’t help but think that the State Board has misstated this issue. The funeral homes are the point of sale for MFT contracts, and are collecting funds from consumers. The funeral home are acting in some form of an agency capacity when preparing contracts and forwarding consumer funds. But, if the State Board is given the benefit of the doubt, this problem could be remedied with an amendment to the MFT provider agreement. If funeral homes are unwilling to assume an agency relationship, the State Board could easily bring disciplinary proceedings against the funeral homes for performing seller functions without a license.
The risk to the MFT in establishing agency relationships with each funeral home provider is that it assumes responsibility for the agent’s compliance with Chapter 436. One funeral home’s refusal to comply could jeopardize the MFT’s seller license, and all those funeral home providers who rely upon that license.
With regard to the MFT trustee, the Complaint states the MFT has delegated all of its duties to Eagle Bank. As between a preneed seller and the trustee, there will be some overlapping administrative duties. A trustee could well agree to assume all administrative functions regarding the acceptance of contracts and funds, and the distribution of trust funds directly to funeral homes and/or consumers. But, the delegation of such functions is typically set out through an administration agreement between the seller and trustee. Fiduciaries customarily require administration agreements to limit their liability exposures. The Complaint does not describe the agreements that exist between the MFT and its trustee. Nor does the Complaint offer whether the MFT has provided Eagle Bank written policies and procedures. Such documents would evidence the oversight needed to overcome the sham allegation.