Preneed: A Pandora's Box of Problems
Cemetery owners have two choices for their care fund trust: the local bank or the national bank that solicits death care trusts.
When the local bank is used, the care fund is typically administered like an estate planning trust. The bank’s compliance office may be unfamiliar with the applicable state cemetery law and its restrictions…
The care fund trust is a source of frustration for most cemetery operators. Rather than offsetting maintenance expenses, the care fund is a state-mandated money pit. A percentage of grave sales must be deposited to trust with little or no income being paid back to the cemetery by the trustee. For the average-sized care fund…
With legislation introduced this past January, Illinois could join those states which expressly authorize cemetery fiduciaries to take the unitrust election and make fixed distributions to cemeteries. Senate Bill No. 3207 proposes to amend Illinois’ Cemetery Care Act to add provisions which would define ‘total return distribution’ and thereby allow care fund trusts to make…
We believe three fiduciary powers are crucial to reviving cemetery care funds: investment diversification, unitrust elections and the power to adjust. It has been more than 12 years since we first posted about the need to repair cemetery care funds (Cemetery Endowed Care Funds and the Fixed Income Investment). That post touched on…
Financial relief is coming to Missouri counties with cemeteries. House Bill 443 would allow county commissioners to withdraw principal from perpetual care funds to pay for cemetery maintenance. When combined with the authorities granted counties four years ago by HB 51, Missouri county commissioners can now diversify cemetery perpetual care trusts and restate those trusts…
In our prior post, we recommended that the Evergreen Cemetery Association explore the Minnesota trust code provisions regarding the trustee’s power to adjust (501C.1112). This is something other “excluded” cemeteries should also consider. By excluded, we mean cemeteries owned by associations, churches, cities or counties that are typically excluded from regulation of…
The Funeral Director Daily recently wrote about the Evergreen Cemetery Association in Brainerd, Minnesota. Like so many cemeteries, Evergreen is running a deficit and its board is worried about the future. The Funeral Director Daily suggests the situation cries out for a relaxation of government restrictions over the Association’s care fund. If the cemetery could…
In our third post on Missouri’s endowed care cemetery audits we look at the request for the cemetery’s legal documents. The current audit notice requests copies of the cemetery’s trust agreement, rules and regulations, contract forms, deed forms, brochures and any other materials making an endowed care representation. In essence, the audit is going to…
Missouri is catching up on its auditing of licensed endowed care funds. Within the past couple of months, most of our Missouri endowed cemeteries received the attached notice requesting reports and documents for audit. In prior posts, we have suggested that the Office of Endowed Care Cemeteries (OECC) audit process should be revised. Our next…
A Google search of “state funeral association master trust” will return hyperlinks to dozens of state funeral director associations. In the 1970’s, funeral associations began establishing master preneed trusts as an alternative to passbook savings accounts. As preneed gained acceptance with funeral directors, the associations saw the opportunity to provide administration and create a revenue…