In contrast to Missouri’s Chapter 214, most states’ cemetery laws do not exempt all cemetery associations from care fund requirements. We do find that some states exempt small non-profit cemeteries (typically based on acreage). Some states limit non-profit cemetery exemptions to grandfathered situations (a cemetery established prior to 1940). These small cemetery associations are more akin to a family cemetery and are dependent upon volunteer services for maintenance and care. As discussed in the Exception that is the Rule, more than 95% of Missouri cemeteries are exempt, and cemetery associations comprise the second largest segment of “exempt” cemeteries. Missouri’s exemption makes no distinctions on the size of an association’s cemetery.
Unlike the church cemetery, the association cemetery must be self-sufficient when generating revenues to provide care and maintenance to graves. When Chapter 214 was amended to provide supervision of endowed care funds, preneed was not a major source of revenues for Missouri cemeteries. Two and a half decades later, cremation has cut into the burial ritual. To battle the decline in burials, cemeteries have turned to preneed, which has become an important revenue stream for many of our cemetery clients. Through preneed, cemeteries can make burial plans more affordable to their customers. But obviously, the vast majority of Missouri’s cemetery associations have cut themselves off from preneed revenues because of the fear of state regulation of their endowed care funds.
That fear is not without some merit. The Chapter 214 audit process has a reputation for poorly defined and time consuming. Rather than focusing on whether the cemetery is timely depositing the correct amounts to trust, the audit assumes the broader scope of general compliance with Chapter 214. And then there are the limitations upon what the association can withdraw from the care fund. When net income is defined to exclude capital gains, the association may not view interest and dividends as sufficient to meet their maintenance expenses. Some have told us that Missouri’s unitrust election is not enough.
In our next couple of posts we will look at Missouri’s unitrust election and then a revamping of the Chapter 214 audit process.