Preneed: A Pandora's Box of Problems
The next section of Missouri’s preneed record keeping proposal targets trust disbursements made for purposes other than preneed contract performances or cancellations:
(5) Records showing any disbursement from a preneed trust or joint account for any purpose other than cancellation or fulfillment of a preneed contract with a description of the purpose for the disbursement…
Many Missouri preneed sellers have become dependent upon their trustee for the individual contract accounting required by law changes implemented in 2009. Some of those same funeral homes also have consumers make their preneed contract payments directly to the trustee. As a consequence, the seller does not handle consumer funds, and is unable to document…
The next section of the proposed record keeping rule for Missouri preneed sellers addresses the timely deposit of consumer funds to preneed trusts. Missouri’s prior preneed law did not specify when consumer deposits were required to be deposited to trust, and National Prearranged Services exploited that omission. NPS claimed that consumer funds need not be…
In our continuing review of the Missouri Seller Record Keeping proposal, the rule next addresses what a preneed seller must retain with regard to its consumer contracts. However, the proposal actually contains two sections requiring the retention of contracts and agreements (Section 2.A and Section 2.F). Of the two, Section 2.F is the more detailed:…
The purpose for a record keeping rule is to inform licensees what reports and documents that they must either maintain, or create, to enable the preneed examiner to determine compliance with state law requirements. But, the opening paragraph of the proposal given the Missouri State Board puts the cart in front of the horse:
A…
It’s been fifteen months and counting, but the Missouri State Board of Embalmers and Directors and their Division staff are still at odds over a rule for defining minimum record keeping requirements for preneed sellers. The Division staff first floated an “Adequate Records” rule in July 2015, but the draft was not formally submitted to…
As discussed in our prior post, funeral homes are becoming increasingly dependent upon their preneed trustee for individual account administration. Many trustees that provide account administration rely upon programs that use tax cost basis accounting. (For a prior discussion of tax cost basis see “Consumer Options and Administrative Hurdles: Market Value Allocations”.) Tax…
A Missouri funeral home client recently had a consumer with a trust funded contract cancel their prearranged funeral and request a refund. The contract was sold subsequent to the 2009 law change, which provides the consumer a refund equal to all payments in excess of a 5% origination fee. Missouri law allows sellers to withdraw…
Missouri’s preneed seller and provider license renewals expire October 31st of each year, and many funeral directors approach this deadline like they would their tax return: if it is in the mail by Halloween I’m good. But, dozens of Missouri funeral directors found otherwise this past year when they were summoned to appear before…
The Missouri Iron County Mountain Echo ran the following story on August 15th:
A former Ironton Funeral Home Director has pleaded guilty to two counts of stealing in Iron County Circuit Court. The charges stem from the sale of pre-need funeral plans. George Treaster of Ironton entered a plea of guilty to two…