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

Federal and state regulators can not quite agree on how to define the preneed transaction.  Federal regulators tend to view the preneed transaction as a current sale of goods and services (where the delivery is deferred until a future date).  In contrast, state regulators are increasingly defining the transaction in terms that defer consummation of