The New York Times article on funeral planning blurs the line between pre-paying and pre-funding. The savings accounts discussed by the article are one method of pre-funding funeral costs. But the POD savings account is far less secure than final expense trusts or final expense insurance policies. The concern many consumers have is that the… Continue Reading
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New York Times: What if I Move or Die Away from Home?
Posted in Final Expense Trust, Preneed, PreplanningThis section of the New York Time’s funeral planning article attempts to address two separate issues. The issue of what happens when the consumer moves away is one of portability and whether the preneed contract can be transferred to a new funeral home. As we discussed in our first post on the Times article, certain… Continue Reading
New York Times: How to Plan Your Own Funeral
Posted in Guaranteed, Non-guaranteed, Preneed, Prepaid Funeral Contract, Transition DocumentsEarlier this year, the New York Times ran a story that on funeral planning that raised several valid issues and recommendations. We will use the next few blog posts to explore certain issues and recommendations in greater detail. With this post we will start with the article’s discussion of prepaying for a preneed contract, and… Continue Reading
Nebraska Preneed Legislation – Clarifying Trust Liability
Posted in Compliance, Exams/audits, Investments, Reporting, Trust FundedOn January 30th, the Nebraska Legislature will conduct a hearing on a bill to fix a problem with the state’s preneed funeral law. The Burial Pre-Need Sale Act was originally passed in 1986, when preneed trusts invested almost exclusively in government bonds. The intent of the Nebraska law was to require the preneed seller (that… Continue Reading
A Treasury Market Out of Whack: Insurers and Preneed Consumers
Posted in Consumer Advocates, Insurance Funded, Preneed, Preneed Development, Preneed Shortfalls, Price ProtectionIn a prior post, we used Allan Sloan’s article on the Treasury bond market to discuss the impact on preneed insurers and their funeral home clients. The Treasury market has forced preneed insurers to lower their policy returns, which has a direct impact on the profitability of funeral homes. To make insurance funding more profitable… Continue Reading
A Treasury Market Out of Whack: Preneed Insurers and Preneed Sellers
Posted in Insurance Funded, Investments, Preneed, Preneed Development, Preneed Development, Preneed Shortfalls, Price Protection, Price Protection, UncategorizedIn our last post, we used Allan Sloan’s article on the Treasury bond market to highlight the investment exposures to death care trusts. Today we will look at how the Treasury market is also impacting funeral homes that rely upon insurance for preneed funding. Mr. Sloan’s article alluded to insurance companies being required by statute… Continue Reading
Surprise Fees? Not if You Read the Contract
Posted in Cemeteries, Compliance, Guaranteed, Non-guaranteed, Preneed, PreplanningA local Kansas City television station recently ran a story about a consumer’s complaint that his preneed contract did not cover “surprise fees”. The consumer had purchased the preneed contract from a Kansas City funeral home/cemetery combo where he had also purchased a grave space. One fact regarding the preneed contract that jumped out to… Continue Reading
Installment Payments and Preneed: At the cost of the seller
Posted in Guaranteed, Non-guaranteed, Preneed Development, Preneed Shortfalls, Price ProtectionA preneed client recently complained about preneed shortfalls they were experiencing on trust funded contracts. We went back to our 2014 blog post (The Factors Contributing to Preneed Shortfalls: Investment Return and Operator’s Performance Costs) and began an analysis of those factors. Since the ‘culprit’ is usually poor investment returns, we started with a review… Continue Reading
FTC’s Active Supervision Guidelines: A Regulatory Board Exercising Adjudicatory Powers
Posted in PreneedIn its Active Supervision Guidelines, the Federal Trade Commission staff discusses how regulatory boards frequently act in an adjudicatory capacity by seeking to impose discipline on a licensee or by seeking to enjoin an unlicensed individual. While such actions may have an anti-competitive effect, those actions will not necessarily expose the board members to personal… Continue Reading
State Funeral Boards and Oversight Standards: Meaningful Supervision
Posted in Funeral, PreneedIn this past week’s Memorial Business Journal, the NFDA’s general counsel offered insight on the FTC’s guidelines to state supervision of industry regulatory boards. In a decision that rocked state boards comprised of industry members, the United States Supreme Court affirmed a decision that had held members of the North Carolina Dental Board subject to… Continue Reading
Preneed Turf War: Pennsylvania Funeral Directors and StoneMor
Posted in Cemeteries, Cemetery Development, Legislation, Preneed, Preneed Development, Trust FundedIn an unusual move for a death care regulator, the Federal Trade Commission weighed in on the preneed turf war that has erupted between Pennsylvania funeral directors and StoneMor Partners. At the request of the chairman for a Pennsylvania legislative committee, the FTC responded with a detailed letter warning against various bill proposals aimed at… Continue Reading
No Relief from the Federal Reserve: the September Announcement
Posted in Compliance, Guaranteed, Insurance Funded, Investments, PreneedFor an industry that has been dependent on interest income, the past 9 years have been tough on the death care industry. Interest rates started to decline 9 years ago, with the bottom hitting in 2008. Zero interest rates forced death care fiduciaries to diversify into equity investments, but trusts have experienced a sideways market… Continue Reading
The MFT Lawsuit Claims: The Client List
Posted in Associations, Master Trusts, Missouri - SB1, PreneedThe 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… Continue Reading
Preneed Trust Shortages: Missouri’s Income Withdrawals
Posted in Exams/audits, Investments, Legislation, Master Trusts, Missouri - SB1, Recordkeeping, Reporting, Trust FundedPrior to Missouri re-writing its preneed law in 2009, preneed sellers could draw off realized income so long as the withdrawal did not reduce the trust’s fair market value below trust deposits. Seeking income, many Missouri sellers directed their trustees to invest in bonds. As interest rates declined during the early part of the prior… Continue Reading
Missouri and Preneed Deficiencies: What is a shortage?
Posted in Legislation, Master Trusts, Missouri - SB1, Preneed Shortfalls, Reporting, Trust FundedAt its June meeting, the Missouri State Board of Embalmers and Funeral Directors gave instructions to their staff to draft legislation that would provide the Board powers to force preneed sellers to contribute funds to their trusts to cover ‘shortages’. The instruction was not without some controversy as one Board member questioned why he was… Continue Reading
State Master Trusts: Plans of Reorganization
Posted in Master Trusts, Preneed, Trust FundedTwo of the country’s largest association ran master trusts now have pending plans of reorganization. On May 14th, the receiver appointed for the Wisconsin Master Trust filed a Final Report that outlined to a court his proposal for the reorganization of that program. On May 22nd, a hearing was held in a California on the Attorney… Continue Reading
Preneed Downgrades: Refunds
Posted in Compliance, Guaranteed, Preneed, Trust FundedWith increasing regularity, preneed consumers are downgrading from traditional funerals to cremation services. To accommodate the consumer, funeral homes often amend the original contract with a downgrade addendum. An addendum is used to avoid a contract cancellation and a new contract where additional state fees might be required. However, downgrade addendum can pose certain problems.… Continue Reading
Trust Funded Preneed and Insurance Assignments
Posted in Compliance, Exams/audits, Guaranteed, Insurance Funded, Non-guaranteed, Preneed, Recordkeeping, Trust FundedFuneral homes frequently allow the assignment of insurance as partial payment towards a trust funded preneed contract, but the manner in which the assignment is made can cause problems for them. Preneed trustees will not accept an insurance policy for a host of reasons. Insurance proceeds paid to a trust are not tax free and… Continue Reading
Preneed Contracts: Where to Apply a Discount
Posted in Administration, Exams/audits, Guaranteed, Non-guaranteed, Preneed, Trust FundedIt 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… Continue Reading
Criminal Intent: Use of the Wrong Deposit Book
Posted in Exams/audits, Preneed, Trust FundedAn Oklahoma funeral director faces serious prison time over the deposit of preneed funds to his business operating account. The Oklahoma Department of Insurance decided to go to a local prosecutor when a Department audit found the funeral director had routinely failed to deposit consumer funds to the preneed trust required by state law. The… Continue Reading
Rising Interest Rates: A Return to the Good Ole Days?
Posted in Investments, Master Trusts, Trust FundedFor Fed watchers, last week’s announcement signaled a subtle warning that interest rates will likely begin rising by the Summer of 2015. Since September of 2012, Federal Reserve statements have warned that interest rates would remain unchanged for “a considerable time” after the nation’s economic recovery strengthened. The reference to “a considerable time” was dropped… Continue Reading
The Factors Contributing to Preneed Shortfalls: Investment Return and Operator’s Performance Costs
Posted in Guaranteed, Insurance Funded, Non-guaranteed, Preneed, Preneed Development, Preplanning, Price Protection, Price Protection, Total Return Trust, Trust Funded, UncategorizedWhen the Federal Reserve recently announced the end of the quantitative easing program, it did so with a hint that any increase in interest rates could be a considerable time off. Several global factors may now cause interest rates to remain at unprecedented lows for longer than what the Fed had suggested last December. As… Continue Reading
Consumers Payment Options: Administrative Hurdles and Preneed Trusts
Posted in Administration, Associations, Compliance, Master Trusts, Non-guaranteed, NPS/Lincoln, Recordkeeping, Trust FundedThere 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… Continue Reading
Plaintiff’s Star Witness: Doug Cassity
Posted in Insurance Funded, NPS/Lincoln, Preneed Tax, Trust Funded, UncategorizedThe NPS civil trial is scheduled for trial in February 2015, and the SDR’s strategy took a twist when her litigation team filed a motion to dismiss Doug Cassity as a defendant in the lawsuit. The dismissal probably signals the SDR’s intent to use Mr. Cassity’s testimony. Now convinced that Mr. Cassity does not have… Continue Reading