On 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
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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
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
My Preneed Account: Interest Alone Won’t Cut It
Posted in Non-guaranteed, Preplanning, Price Protection, Total Return Trust, Trust Funded, UncategorizedSince President Obama unveiled the new MyRA as his plan to revive Americans’ saving habits, we have been making comparisons between funding for retirements and preneed. Like the MyRA, the non-guaranteed preneed contract could represent more of an introduction to preplanning funding than the final preneed product. As the AARP acknowledged a few years ago,… Continue Reading
The Medicare Tax and QFTs: Don’t look a gift horse in the mouth
Posted in Administration, Preneed, Preneed Tax, Taxes, Trust FundedOver 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 fixed… Continue Reading
Master Trusts: Finding the Rails
Posted in Fiduciary, Guaranteed, IFDA, Master Trusts, Missouri - SB1, Non-guaranteed, Preneed, Trust FundedBoth the Memorial Business Journal and the Funeral Service Insider commented last week on the Milwaukee Journal Sentinel’s February 7th article regarding the former executive director of the Wisconsin Funeral Directors Association. Several issues were raised that should be included in future industry debate, and in particular, I would agree with Mr. Isard’s questions whether… Continue Reading
Dark Clouds and Preneed
Posted in Funeral, Insurance Funded, Preneed, Trust FundedNot that close, even from the 30,000-foot view. That’s our assessment of the Morningstar analysis of preneed and its impact on the death care industry. In “Dark Clouds for the Death-Care Industry”, a stock analyst attempted to explain the preneed transaction, and then provide an assessment of the impact of preneed on the profitability of… Continue Reading
The Illinois Consumer Statement: Trust Expense Disclosures
Posted in IFDA, Reporting, Trust FundedIf their preneed contract is trust funded, Illinois consumers should soon be receiving statements from the bank or trust company that administers their account. These statements are one of the new requirements imposed by SB1682. The contents of the statements are governed by Section 2.h of the Funeral or Burial Funds Act. The Comptroller’s Office… Continue Reading
Preneed Contract Forms: Worth The Paper They’re Written On?
Posted in Compliance, Exams/audits, Funeral, Insurance Funded, Preneed, Recordkeeping, Trust FundedWith the exception of a few states, each form of preneed funding has its own statutory requirements. Consequently, different contract forms are required for each method of preneed funding. So, what does this mean for the consumer worried about the safety of funds paid to the funeral home or cemetery. Among the pecking order of… Continue Reading