Preneed: A Pandora's Box of Problems
PNC Bank has been hit with $15 million of punitive damages because Allegiant Bank did not know its client.
Before opening a fiduciary account, banks are required to perform due diligence on the trust’s grantor and on the trust’s purposes. Such due diligence is referred to as ‘know your client’ or “KYC”. KYC requirements had…
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…
For the past three and half years, many Illinois funeral homes teetered on the brink of financial crisis when the IFDA master trust was forced to write down the value of preneed accounts invested in a special tax exempt fund. As reported last week by the NFDA’s Memorial Business Journal*, the “new” IFDA has negotiated…
Many state preneed regulators share the point of view that the payments made toward a preneed contract belong to the consumer until the prearranged funeral is provided. This perspective was adopted by the California Attorney General in its Eighth Cause of Action brought against the California Funeral Directors Association and its Master Trust. The AG…
It seems paradoxical to see preneed regulators ramping up audit programs while state budgets are being slashed to the bone. Yet, several I-70 corridor states will soon implement new preneed audit programs.
Missouri’s preneed funeral audits will be funded out of a combination of license fees and preneed contract fees. Missouri’s new cemetery law did…
The financial fallout from the failures of NPS and IFDA regarding compliance with state and federal laws has accelerated the decision of many funeral directors to switch to the non-guaranteed preneed contract. That non-guaranteed contract represents a fundamental change in the relationship that is established between the consumer, the funeral home and the preneed fiduciary.
The…
The Comptroller’s Office mailed out letters to funeral homes last week advising how to report the first contribution to the Pre-Need Funeral Consumer Protection Fund. The letter tracks the first few paragraphs of the “Senate Bill 1682 Information” page from the Comptroller’s website.
The funeral home letter includes two documents: a Fee Payment…
For more than 20 years, Nebraska preneed sellers have filed an annual report that accounts for the aggregate contributions and distributions from their trust funds. The annual report form also computes the amount of income that must be accrued to the account if the seller elects to withdraw excess income from the trust. In its…
The Springfield Journal-Register recently reported that Illinois’ Cemetery Oversight Task Force made a recommendation to restrict preneed trusts to investing in government-backed securities. While its difficult to actually find that recommendation in the Task Force’s report, it is not a bad idea for the consumers who purchased a non-guaranteed preneed contract. However, that type of restriction would hinder funeral homes that offer guaranteed contracts.
The…
With two of the nation’s top ten college basketball teams, Kansans are exhibiting clear symptoms of March Madness. With Topeka located between Lawrence and Manhattan, bipartisanship may be tested as tensions mount this week with the Big 12 tournament and the NCAA seedings announcement on Sunday. When Kansas legislators resume their meetings the week of…