In a recent article, Bruce Ruston provides a detailed account of the drama behind the IFDA master trust and its divesture of the key man insurance policies. It is a long, costly story about an organization that pushed the legal envelop in several directions with disastrous results: a master trust without a corporate trustee, insurance
Perpetual Care and Capital Gains: the government’s rainy day fund?
By Bill Stalter on
For the past few years, some Kansas cemeteries have been getting nasty grams from their regulator about their care fund trustee’s treatment capital gains taxes. Kansas, like most states, requires a portion of each grave space sale (interment right) to be contributed to a fund or trust for the future care of the cemetery. Kansas…
Recession and Preneed
By Bill Stalter on
The “R” word is back again. We’re only three years removed from the housing bubble burst, but a sense of normalcy seemed to be returning to the death care industry. It wasn’t necessarily a return to the old ways, not with the increase in cremations and regulations. But, many operators were coming to grips with…
I’m a funeral director, not a fund manager!
By Bill Stalter on
Preneed scandals in Illinois, Missouri, Texas, and California have state regulators moving to implement new audit procedures. But with new laws passed in the wake of NPS and state master trust problems, the frequency and scope of the future audit could change dramatically. It is no secret that the scope of the preneed audit in…
Preneed Fund Manager: Is your O&E coverage current?
By Bill Stalter on
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…
The Independent Preneed Trustee: In a Perfect World
By Bill Stalter on
A breakdown in communications between the CFDA and the Cemetery and Funeral Bureau has resulted in the California Attorney General filing a lawsuit that can be appropriately described as vitriolic. The “California lawsuit” could provide some valuable ‘what to avoid” lessons for regulators in other states.
In an unusual move, the Bureau went…
Taxes and the Bounty Hunter
By Bill Stalter on
Posted in Preneed, Preneed Tax
When news of the indictment of 6 National Prearranged Service officers was reported last November, many newspapers picked up the AP version that included a quote from the Internal Revenue Service criminal investigator. The fact is that the Federal investigation of NPS involves investigators from the IRS, the FBI and the U.S. Postal Inspection Service.
Making Lemonade: the 2008/09 Capital Loss Carry Over
By Bill Stalter on
Posted in Preneed, Preneed Tax
The 2010 calendar year proved a welcomed change for many trust funded preneed programs. The 2008 collapse of the home mortgage market triggered a melt down of bonds that lingered well into 2009. The press provided extensive coverage of how the situation impacted our 401k accounts. Stories about value declines of 25% to 33% were…
The Next Twist in the IFDA/Merrill Lynch saga
By Bill Stalter on
The Springfield Journal-Register reported last week on the latest lawsuit to hit Merrill Lynch, the IFDA and the law firm that represented the Association.
One aspect of the lawsuit focuses upon the claim that the key man insurance policies sold to the master trust were not suitable investments. Without an insurable interest, the policies could…
The Illinois Consumer Statement: Trust Expense Disclosures
By Bill Stalter on
If 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…