Preneed: A Pandora's Box of Problems
The question isn’t whether preneed needs to change, but how to change it.
The November 2nd edition of the Funeral Insider highlights a new industry survey by Citrin Cooperman, a highly regarded accounting firm. The newsletter includes a section on preneed, and experts’ take on the survey. Their consensus is that preneed is broken.
With the upcoming new year, Illinois smaller funeral homes will begin searching for a corporate trustee for their preneed funds. With the Legislature’s approval of the Governor’s Amendatory Veto of SB1682, funeral directors lose the authority to serve as fiduciary of their own preneed funds.
Like most states’ preneed laws, Missouri’s Chapter 436 has always contemplated a depository accounts for the small funeral operator who provides preneed as an accommodation. Many funeral homes do not sell enough preneed to warrant the expense and hassle of either a trust or an insurance license. Chapter 436 allows the funeral director to place…
The old axiom was that it would take three consecutive legislative sessions to get a preneed bill passed. If Missouri and Illinois are indicators of the current preneed reform movement, the charm may be based not on attempts but actual bills passed by the legislature.
The Illinois Comptroller’s proposal for preneed reform, SB1682, is progressing…
The funeral director’s decision about how to fund his preneed is influenced by the state’s trusting requirement, investment returns, administrative convenience and the volume of preneed business. Essentially, there are three methods of funding preneed: the depository account, the master trust and the insurance policy.
The funeral director’s use of the depository account predates all…
The emergency rule that implements Missouri’s $36 per contract fee becomes ‘official’ on October 4th. Missouri funeral directors question whether the fee is too high, and whether it will contribute to the decline in preneed sales. The analysis required for the emergency rule reports that the fee is expected to generate $612,000 of revenues that will…
Over the past few years, preneed frauds have been measured in terms of hundreds of millions (with the suggestion that the NPS loss will top a billion). And, funeral directors and consumers have been frustrated by the perception that regulators are helpless to stop preneed fraud. Apparently, one local prosecutor from Texas took notice.
When the…
The Missouri State Board of Embalmers and Funeral Directors faces two hurdles to implementing SB1: disagreements over the interpretation of key provisions and informing the industry how the Board will enforce the law. These hurdles have put the Board in to a Catch 22 situation.
SB1 was drafted under the cloud of the NPS crisis.
The September edition of the Mortuary Management ran an excerpt from a Funeral Monitor article about the California Master Trust suffering a deficit.
If the story is accurate about the master trust’s shortage, the author’s speculation about the reasons for the deficit omits a possible factor that has existed for years: the 4% administration fee.
As explained…
One criticism of Missouri’s prior preneed law was that the Attorney General’s office was dependent upon the State Board to refer complaints for legal enforcement. If the State Board didn’t refer a Chapter 436 violation, the AG’s only enforcement alternative was to pursue an action under Missouri’s Merchandising Practices Act (Chapter 407). During the 2008…