The lawsuit brought by the Missouri Funeral Trust against the Missouri State Board of Embalmers and Funeral Directors and CFL Pre-Need includes a number of unique and dubious claims. For example, the lawsuit defines CFL Pre-Need, an insurance company, as a competitor but not funeral home clients that are licensed as a preneed seller. The
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Trustee Investment Liability: The Preneed Purchaser Wild Card
By Bill Stalter on
Back in March, the NPS Special Deputy Receiver won a judgement of $355 million against PNC Bank (as successor to Allegiant Bank). In defense of Allegiant Bank, PNC argued that Missouri’s Chapter 436 defined the trustee’s duties as owed solely to the preneed seller. That was the intent of the Missouri Funeral Directors Association when…
Trust Shortages: Sponsorship Fees
By Bill Stalter on
It was been almost 7 years since we posted the piece titled “Trade Association Membership: weighing the costs vs. the benefits”. Towards the end of that article, we discuss how the master trust sponsor fee provides a crucial source of revenue to state associations. That post was written subsequent to the dissolution of…
Preneed Trust Shortages: Investment Management Fees
By Bill Stalter on
One strength of the state association master trust is that it can provide the ‘critical mass’ required for economies of scale to reduce trust management costs. As the state master trust grows in size, the association can better negotiate asset management arrangements. However, the reality has been very different for these programs. The reorganization of…
Missouri Funeral Trust: Seeking a Gag Order
By Bill Stalter on
On July 27th, a Missouri court will consider a motion filed by the Missouri State Board of Embalmers and Funeral Directors to be dismissed from the lawsuit filed by the Missouri Funeral Trust. One of the allegations made by the Missouri Funeral Trust was that confidential information obtained by a state auditor regarding the program’s…
NPS’ Legacy of Damages: No One Knows How Deep the Waters Were
By Bill Stalter on
When NPS first collapsed, the estimate of the company’s liabilities to funeral homes was reported to have been as much as a billion dollars. When the SDR finally brought the case to trial, the damages awarded by the jury were less than half of the original estimate. While this author believes the actual damages are…
Question for The Jury: Exculpatory Clauses and Preneed Investment Supervision
By Bill Stalter on
It is common for master preneed trusts to have investments directed by an independent fund manager. The pooling of smaller trusts allows funeral directors to achieve the critical mass needed to engage professional asset management. When investment functions are delegated, the trustee typically wants to be relieved of the supervision and liabilities that accompany those…
Consumers Payment Options: Administrative Hurdles and Preneed Trusts
By Bill Stalter on
There are three scenarios for administration of preneed installment payments: the funeral operator collects payments, the trustee collects payments or a third party administrator collects payments. The entity collecting installment payments must be able to apply each payment to the correct preneed account, and provide the other party (or parties) current payment balances. If the…
Consumer Options and Administrative Hurdles: Market Value Allocations
By Bill Stalter on
The conventional guaranteed preneed transaction is premised upon investment returns offsetting performance cost increases to the funeral home. Many funeral homes restrict consumers to single payment preneed contracts to limit their exposure to funding short falls. If the funeral home allows the consumer to pay the preneed purchase price over 60 months, the preneed trust…
Death Care Legislation: Not Without a Consensus
By Bill Stalter on
The reversal of the Heffner decision generated a wide range of comments, but those made by Wilson Beebe resonated most with our initial review of the decision. The lower court decision was based on a challenge that the Pennsylvania Funeral Law was unconstitutional on its face. A law can also be challenged as unconstitutional because…