Preneed: A Pandora's Box of Problems
And so goes the list of New Year resolutions for the Illinois funeral director, with the last being forced on the industry by SB 1682.
Funeral directors and consumers can learn more about the new independent trustee requirements by visiting the Comptroller’s…
Rather than defend the legality of its master trust, the IFDA sought to enforce the gentlemen’s agreement that the association perceived it had with the Comptroller. The 2006 exchange of correspondence reported by the State Journal-Register underscores the risks that death care operators take when they structure arrangements that exceed the parameters of applicable law.…
Last week’s exchange between the State Journal-Register and the Illinois Comptroller’s office underscores just how poorly some regulators (and funeral directors) understand the preneed transaction.
The newspaper’s June 24th editorial included the following statement:
The directors allege they didn’t find out about the audit until fall 2007 when the comptroller revoked the IFDA’s license to…
The Illinois Division of Insurance made the right call: the IFDA master trust does not have an insurable interest in the lives of the members who participate in the trust.
A preneed trust is intended to fund the liability that arises when the preneed beneficiary dies and a funeral must be provided. Accordingly, it…
Finding a fiduciary institution that is both knowledgeable and receptive has proven a challenge to funeral directors. Until a few years ago, the larger operators could rely upon the size of their trust to at least generate interest from prospective institutions. However, litigation exposures are now causing institutions to hesitate with even the largest of…
It may be a mere coincidence, but the $9.7 million demand made by Comptroller Dan Hynes upon the IFDA is approximately 25% of the $39 million dollar “deficit” that the master trust had accrued by 2006. In applying the letter of the law, the Comptroller has rejected the IFDA approach of crediting individual preneed accounts…
The New York preneed law may be the best consumer oriented preneed law in the country (see Page 47 of the AARP Survey). It requires 100% trusting, the accrual of income and limits the permissible investments. The New York State Funeral Directors Association has good reason to be proud of their preneed program. Yes, their…
Like the Swine Flu, a preneed virus has been spreading across the Midwest. Looking for a cure, state legislators and regulators have been forming research teams. It all started last summer, with Missouri’s Chapter 436 (funeral) working group and Chapter 214 (cemetery) working group. Now, Illinois is establishing a preneed task force, and Kansas…
As new allegations surface about the Merrill Lynch broker associated with the IFDA master trust, some may appropriately ask why a preneed trust would ever invest in an insurance product. There was a time when the twain shall never meet. That all changed in January 1988, and specifically when the IRS and Treasury decided to…
With a recent editorial opinion, the State Journal-Register seeks to keep U.S. Senator Roland Burris accountable for his role in the IFDA master trust problems by asking the following questions:
· As comptroller, why did he think it was a good idea to allow the IFDA control of the fund?
· How did he…