It is common for a funeral home to offer a discount to a preneed contract purchaser when the sales price is to be paid in full at the time of purchase. However, funeral homes are often inconsistent in how the discount is applied to the preneed contract. We have seen the discount recorded as a
Administration
NPS Trustees: Standard of Care for Preneed Administration
By Bill Stalter on
Final arguments were heard in the NPS civil trial this past Friday. With the SDR having presented evidence through the prior Friday, the defendant trustees presented their case in less than a week. This may reflect that the NPS trustees had viewed their duties as having been defined by Chapter 436 as relatively low. As…
Questions for the Jury: the mirror trust account
By Bill Stalter on
A recent order issued by the Federal Court trying the NPS civil suit referenced a mirror trust employed by the defendant bank (12-31-14 Order – Comerica MSJ ). To facilitate the trading of investment securities, a brokerage account is established with a firm that can administer the transactions more efficiently than the fiduciary institution. …
Getting Personal: liability and the preneed trust officer
By Bill Stalter on
Earlier this week, the Federal Court that is to try the NPS civil lawsuit next month issued an order (Order denying Morisse JOP Mtn) that will raise red flags for the banks that serve as preneed trustees. In denying the motion of an officer of Allegiant Bank, Judge Richard Webber held that the…
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…
Trust Administrative Hurdles: Tax Allocations
By Bill Stalter on
A few weeks ago, we discussed the need to offer to consumers new preneed funding options, and outlined the various administrative hurdles faced by funeral homes that rely upon trust funding. (Preneed Trust Options: Administrative Limitations) With this post, we will examine how the non-guaranteed option impacts tax allocations and makes spreadsheet administration…
The Medicare Tax and QFTs: Don’t look a gift horse in the mouth
By Bill Stalter on
Over the past few years, preneed trust administrators have been wondering whether a Section 685 qualified funeral trust could look to each individual trust’s income and apply the lower tax rates for long term capital gains and qualified dividends. The issue has taken on more relevance as preneed trusts look to diversify out of …
Checks and Balances: Who has your back?
By Bill Stalter on
In the days that followed the Wisconsin Funeral Directors Association being placed into receivership, some of the WFDA’s sister associations were quick to point out they had ‘checks and balances’ that would protect consumers’ funds from the problems that tripped up the Wisconsin Funeral Trust. As we reported in our last post, a crucial ‘check…
A Call to Mark to Market: The NFDA
By Bill Stalter on
A short three and a half years ago, the funeral industry reeled from the collapse of National Prearranged Services and the emerging story of the Illinois Master Trust. The NFDA was slow to respond to the crisis, and when it did, this blog joined the criticism. Fast forward to September 2012, and the NFDA responds…