Funeral Trusts

[Newby]

To clarify my previous post I want to address Ramaiz's points one by one because I know there is a LOT of wrong information out there floating around.

I advise my clients to never pre-pay funerals direct to funeral homes.

1) Once the funds are there, your stuck. You cannot transfer the money to another funeral home.

Wrong! It's the complete opposite. A funeral preplan that is funded with an insurance policy or trust can be easily canceled or transfered at any time. The original funeral home has no control over the policy in MOST states. (Florida and Mississippi are two exceptions. Florida the contract can be canceled and the original money refunded but with no interest and Mississippi is no-man's land as far as I can tell.)

2) If the Funeral Home runs out of business, what’s going to happen to your money?
Total misconception. The funeral home never has your money. Hundreds of funeral homes went bankrupt in recent years that were owned by The Lowen Group, Prime Succession and other funeral consolidaters and not one penny of preplanned funeral money was ever at risk because the money was held by Forethough, Homesteaders, Monumental etc. as life insurance policies. They were just as safe as any other life insurance policy.

3) People are sold funeral packages, and think that they are locking in a price. NOT TRUE. Funeral homes will quote the family today’s price for the funeral, not the price they thought they had 10 years ago.

Not true for the most part. The way it actually works is: they are given a funeral quote today ($8271.20 for example.) They pay that amount today and have a starting face amount of $8,941.83. Let's say 15-years goes by before they die and the policy grew at 3% compounded it would now have a death benefit of $13,929. Let's say the funeral price increased an average of 4% each year so it is now $14,895 (a shortage of $966.) The funeral home writes off the difference and the family owes no money.

If I had sold this same policy to a family with a separate funeral trust (no assigned funeral home) it would have performed the exact same except the family would have to pay the $966 shortage.

If the funeral price would have increased at only 3% ($12,885) there would be an overage of $1,044 and that amount would be paid to their beneficiary of the life insurance policy or the estate if no beneficiary is named. If they had been on Medicaid, the overage of a funeral trust must ALWAYS be paid to Medicaid. That is why you don't want to OVERFUND a funeral trust which the NGL sellers usually encourage people to do (because of the low 2% growth rate.) For the record NGL also offer higher growth policies but that is not what I have seen being sold for the funeral trusts if there is no funeral home involved.

Single Premium life insurance may make sense, but you have to understand that if a lawsuit occurs, admission to a Long Term Care facility, or a Tax Lien, their cash value from that life insurance policy is at risk.

Wrong! IF someone has a single premium life insurance policy and they are going on Medicaid, they can sign it over to a funeral home right up to the very day they apply for Medicaid. That makes it immedietely exempt from counting as an asset for Medicaid qualification. There is no reason to pay money or assign life insurance into an irrevocable funeral trust if you don't know for sure you are going to be applying for Medicaid. There are plenty of reasons why it is a bad decision and they all go back to giving up your control of your money for no reason.

A Funeral Trust or Irrevocable Life Insurance Trust is really the only viable answer with no funeral home being named the beneficiary.

I obviously disagree.

 

[Newby]

Newby I appreciate your response, I honestly had no Idea I was so far off base. So are you saying that most funeral homes do not use irrevocable trust to set up payment for the funeral costs?

In Ohio where I do 100% of my business, I have heard Story after story (and have personally experienced) a funeral home make the family pay extra because the policy did not grow at a high enough rate.

As a matter of fact, One client had a some Kind of Forethought Policy (this was years ago) and the annual interest rate on it was 1%. They made her pay extra for the casket and such because she was quoted a lesser price (years before).

Also a story rings a bell of a funeral that stole peoples money and ran out of business... I want to say in TN, Im not for sure...

Are these legitimate concerns? Or am I just crazy?

The story in Tennessee was the frature article in the January AARP magazne. It was about a scam artist who bought 3-cemeteries (with funeral homes on them) in the Memphis Tennessee area. AARP slanted the story about funeral preplanning but the case they were talking about was actually about him embezelling the cemetery's "perpetual care fund" which had millions of dollars in it.

An associate of his bought 5-cemeteries in Indiana and embezeled those cemeteries for 24-million dollars in January 2008. In those cases, people went to jail. And it was cemetery money. Any money that was paid to those businesses that was in insurance trusts was safe. I'm sure many of them were with Forethought and others.

There is a company called Service Corporation International SCI and they operate under the brand name of Dignity Memorial which had Forethought design an insurance product exclusively for them that grows at only 1% apr. They want the max commissions at the time of sale and if the contract is transfered to a funeral home outside their network, it will be way underfunded. If funeral homes accept an incomming transfer of those contracts they will usually only take them as insurance (not a guaranteed assignment.) That should be made clear to the client prior to signing the transfer. As far as I know SCI does honor the guarantees as long as the family keeps the contract within their network of SCI-owned funeral homes. The insurance product that SCI uses today is American Memorial Life which is owned by Fortis/Assurant. It still grows at 1% as far as I know.

Forethought bought out Assurant's pre-need business in 2005 but rejected the American Memorial division.

Ohio is a state that requires funeral directors to do the preplanning. That is usually bad because most funeral directors don't know ANYTHING about life insurance. Many of them will accept assignments of regular final expense life insurance (no growth at all) and the family feels like they preplanned because they assigned their policies to the funeral home. At the time of death, more money is always owed. This is usually percieved as a preplan that was not honored but it really is not. It is usually caused by a funeral director doing a job that he has no training for or knowlege of.

Again; If the family buys a guaranteed funeral preplan throught the funeral home they plan to use (or transfers it to one that will accept the guarantee in writing) I think you would have a hard time finding a case where a consumer is dis-satisfied.

And no; funeral homes should NOT make the preplans irrevocable UNTIL Medicaid is involved. The exception is Indiana which has a very bad law that they have to be irrevocable. Kentucky and many other states will not allow irrevocable funeral trusts UNTIL Medicaid is applied for (something the funeraltrust guys are ignoring.)

 

[theinuranceguy]

Newby I really appreciate all the info you’re sharing. Most the clients I write on funeral trusts are people that are entering into a nursing home, or have too many assets for Medicaid/QMB. I always felt like I was doing the right thing at the time, but maybe I should do some more research.

Tell you what, because you know more about this than I do, I will do some research and tell you what I find, you tell me where I am going wrong.

I guess you can teach an old dog new tricks!

Newby, if you ever have a Medicare question feel free to call me anytime, HAHA!

You've truly been a great help man!

 

[xrac]

Newby,

Thank you for the information. You are a great resource!

 

[Newby]

Newby,

Thank you for the information. You are a great resource!

I do tend to get on a rant sometimes.

Some topics get me going. If AARP and others would really care about helping seniors, they would educate them about the correct way to protect themselves not try to scare them with slanted nonsense.

The things that seniors SHOULD be told about funeral preplanning that would actually help them are:

1. Make your check out to the bank or insurance company NOT the funeral home. A crooked funeral home owner or employee could stick the money in his pocket and no one would know until years later that there was a problem. Same thing could happen with a crooked agent selling funeral trusts without a funeral home involved.

2. Always make sure you recieve the insurance policy within 30-days of paying for it. Some people don't even know they are to recieve an insurance policy. They think they are actually paying the money to the funeral home. Education about this would help reduce any chance that a crook could steal their money.

3. Make sure EVERYTHING the client wants included on their funeral is included on the goods and services page of the contract. Anything left off is of course not included. Also make sure they understand that cash advanced items (flowers, death certificates, sales tax etc.) are clearly marked as not price guaranteed. Funeral homes can not control prices on items they aren't providing. Only the funeral services, casket, and burial vault are guaranteed with most contracts.

4. Make sure the client knows the TOTAL of payments if he is paying over time. They should know how long they have to pay the contract with "same as cash" payoff terms (usually two years.) They should also know how much death benefit they have if they die before the contract is paid in full. Usually full death benefit if they are even reasonably healthy and even the terminally ill can have 50% coverage in 6-months and full benefit in 12 (depending on their payment choices.)

5. Make sure that if they sign the trust as irrevocable there is a good reason for it. Just because they MAY need to go on Medicaid SOMEDAY is not reason to give up your policy rights today. Clients should keep the agreement as REVOCABLE until there is a need to make it irrevocable.

6. If they decide to transfer the preplan, they should make sure the new funeral home will accept the contract as price guaranteed. If the recieveing funeral home won't guarantee it, they should shop around for another funeral home that will. Most funeral homes will gladly accept the contracts and guarantee them and some states (Indiana is one) requires it.

If AARP would print an article with information like this, they would actually help seniors. But then...I guess that may cut into their sales of their overpriced final expense insurance.

 

[theinuranceguy]

Ok Newby, did some research over the weekend. Talked to family members who have gone to funeral homes to pre plan, talked to insurance agents who sell irrevocable trusts, and even got a hold of one funeral director. This is my observation and conclusion, tell me what you think…

I first spoke to an aunt of mine, who recently buried her husband. Although I was/am their Life Insurance agent, they had previously “Pre-Paid” their funeral at the local funeral home. They were told that the price was “Locked In”. The only thing not locked in was the price of the Minister and the price to physically bury the casket at the cemetery. I looked at an itemized receipt and saw that many of the costs had greatly gone up. $4,000 casket was now over $5,500 alone! She then told me that she was billed the difference, from what she initially paid, to what “Today’s Price” is. She said that she was concerned, and talked to the planner that had originally made these arraignments. She wanted to know why these prices where not locked in. She was informed that they were quoted the prices of what it would cost them the same day to have the funeral, and they the funeral home, were not responsible if the interest rate of the policy did not perform as good as inflation.

I then spoke to a number of agents that I know to ask them of the pros and cons of pre planning a funeral at the local funeral home. They all market irrevocable trusts as a I do, and they ALL said the same things I did.
-No flexibility
-Your stuck with a funeral home
-If funeral home runs out of business you have no control of where your money goes
-If you move out of state your money is stuck at the same funeral home
And yes, I even Got:
-Funeral homes will tell people that they lock in rates, but as time goes on, and inflation occurs, the family will be billed the difference in the DB to what the funeral home actually costs.

I then spoke to a funeral home director (I think?)… I asked for the Director and I was transferred over to this guy. I voiced to him my concerns and told him exactly what Ive said here. He told me that it is a funeral homes decision whether or not they guarantee the policy. Some will some wont. I asked him if they did and he said, of course. I asked if there were others in the area that did not, and this is what he said, no joke.

“Most will not guarantee it unless it is brought up. Here at _______ and ______ Funeral homes we guarantee all our Pre Paid funerals”

 

[Newby]

Sounds like Ohio is a state where funeral homes can do pre-plans that are not guaranteed. Some states (Indiana and Kentucky are two I'm most familiar with) REQUIRE it to be guaranteed. Tennessee is one where the guarantee is optional.

One big problem is there are 50-states and 50-different laws. It would make it much easier if ALL states REQUIRED the guarantee and if all states would NOT allow any of the policies to be irrevocably assigned UNTIL Medicaid is applied for.

Your friends that told you the funds are "more tied up" if they purchase through a funeral home are just wrong. The NGL policy you are selling is exactly the same weather YOU sell it or the funeral home sells it. Same with Forethought, Homesteaders, Monumental, NGL, FDLIC, Invertors Heritage and all the rest of them. No one has control of the policy except the insured and/or owner of the policy. The only difference is the "guarantee" from the funeral home (if there is one.)

Most funeral homes will want better growth of the death benefit which will also be better for the consumer but will result in lower commissions for the agent. An agent that is not selling for a funeral home will care little about policy growth and will accept the 2% that seems to be the norm in order to maximize commissions.

I hate to hear stories such as the one about your aunt. If she were my aunt, I would check her original paperwork to make sure there was no mention of a "guarantee" when it was sold. I'm pretty sure there won't be one if that's the way they do theirs but if there is, I would go back there and enforce it.

I don't recommend that anyone preplan if there is no funeral home guarantee. BUT, in your aunt's case I bet she had a much better policy than the one's you and your friend are selling. And she had basically the same thing YOU are selling. A prepaid irrevocable trust with no guarantee that is easily transferable anywhere she wants and is exempt from Medicaid and she probably had 4% annual growth on the policy and she probably also had a 2-or 3-year period to pay it off with a same as cash option.

Here is what I would do if I were you. Your aunt probably prepaid her funeral at the same time she paid her husband's. I would take her to the funeral home and insist on a price guarantee in writing. If they won't do it, I bet every one of their competitors will and I would transfer it to them.

I agree that ALL states should REQUIRE the guarantee by law. There is no "oral" guarantees. It's either in writing or it doesn't exist.

As far as your other agent friends thoughts:
1. -No flexibility - Completely wrong. They can transfer funeral homes, cancel the agreement, take loans, cash surrender and do anything that anyone else with a whole-life policy can do. If they irrevocably assign it they can no longer take loans or cash surrender it (should NOT be done unless applying for Medicaid.)

2. -Your stuck with a funeral home - Wrong! You can easily transfer your policy to any funeral home you want any time you want and you don't even need to contact the funeral home that sold it to you. You can even cancel the funeral contract all together and just leave the money to your kids or any other beneficiary. If there was a price guarantee with the original funeral home, you will need to verify (in writing) that the new funeral home will also price guarantee it (some states require this, others do not.) If you irrevocably assign the policy you can still transfer it anytime to a new funeral home but you can not cash surrender it it leave money to anyone other than Medicaid or your estate (Medicaid gets the estate.)

3. -If funeral home runs out of business you have no control of where your money goes -Wrong! If the funeral home goes out of business, YOU select a new funeral home and transfer it to them.

4. -If you move out of state your money is stuck at the same funeral home - Wrong! Forethought, Homesteaders, Monumental, NGL, FDLIC, Investors Heritage etc. will pay any funeral home you want in any state. Or they will pay your children or spouse if you make them the beneficiary (unless you've been on Medicaid)

5. -Funeral homes will tell people that they lock in rates, but as time goes on, and inflation occurs, the family will be billed the difference in the DB to what the funeral home actually costs. Possibly! I'm sure in states where guarantees are optional, the funeral homes that don't offer them don't make a point of telling people that and consumers will assume that there is a guarantee. That could cause problems. Those states should have more consumer friendly laws or require very large print to disclose a non-guaranteed contract. BUT...you are saying the better alternative is a trust that doesn't have a guarantee anyway. So how is that better? The 2% growth rate? The irrevocable assignment when it's not needed? The overfunding in the first place when they will lose the overpayment to Medicaid if they go on Medicaid assistance?
Should a person who can buy a guaranteed funeral trust for $7832.54 opt for a $10,000 irrevocable trust that is separate from a funeral home? Not in my opinion.

But I agree some better disclosures and consumer guidelines would be of help to make sure consumers are preplanning safely and getting what they expect to get. Same with ALL areas of insurance though. I meet people every month at the end of their term life insurance and mad because they didn't understand it was...term.

Ok Newby, did some research over the weekend. Talked to family members who have gone to funeral homes to pre plan, talked to insurance agents who sell irrevocable trusts, and even got a hold of one funeral director. This is my observation and conclusion, tell me what you think…

I first spoke to an aunt of mine, who recently buried her husband. Although I was/am their Life Insurance agent, they had previously “Pre-Paid” their funeral at the local funeral home. They were told that the price was “Locked In”. The only thing not locked in was the price of the Minister and the price to physically bury the casket at the cemetery. I looked at an itemized receipt and saw that many of the costs had greatly gone up. $4,000 casket was now over $5,500 alone! She then told me that she was billed the difference, from what she initially paid, to what “Today’s Price” is. She said that she was concerned, and talked to the planner that had originally made these arraignments. She wanted to know why these prices where not locked in. She was informed that they were quoted the prices of what it would cost them the same day to have the funeral, and they the funeral home, were not responsible if the interest rate of the policy did not perform as good as inflation.

I then spoke to a number of agents that I know to ask them of the pros and cons of pre planning a funeral at the local funeral home. They all market irrevocable trusts as a I do, and they ALL said the same things I did.
-No flexibility
-Your stuck with a funeral home
-If funeral home runs out of business you have no control of where your money goes
-If you move out of state your money is stuck at the same funeral home
And yes, I even Got:
-Funeral homes will tell people that they lock in rates, but as time goes on, and inflation occurs, the family will be billed the difference in the DB to what the funeral home actually costs.

I then spoke to a funeral home director (I think?)… I asked for the Director and I was transferred over to this guy. I voiced to him my concerns and told him exactly what Ive said here. He told me that it is a funeral homes decision whether or not they guarantee the policy. Some will some wont. I asked him if they did and he said, of course. I asked if there were others in the area that did not, and this is what he said, no joke.

“Most will not guarantee it unless it is brought up. Here at _______ and ______ Funeral homes we guarantee all our Pre Paid funerals”

 

[theinuranceguy]

Hey Newby,
I think your right, OH does not require a guarantee. Although from talking to more people, the selling point is the guarantee, and then the Funeral Home hits the family with a bill after the funeral is said and done. Im not saying all Funeral Homes do this, but seems to me the masses do (at least in OH).

It also seems to me, from talking to people, that a lot of these policies, although written in a funeral home, are still Irrevocable Funeral Trusts with the Funeral Home as the Irrevocable Beneficiary and a third party as the Trustee. These are Non Transferable.

I guess from talking to you the best situation for a client to do for some funeral planning would be to go to the local funeral home, arrange your funeral, get the cost, set up a Pre-Need policy and get a Guarantee in writing.

If all these are not available and they are going to put you in a trust, its my opinion to go into a trust not irrevocably assigned to a funeral home.

But there is still a place for irrevocable funeral trusts. People who must “spend-down” assets because of Medicaid, or people who are over 85 that want to transfer money to beneficiaries tax and probate free.

You’re a great resource Scott! I honestly appreciate all your help!

 

[honestagent]

Great wealth of knowledge! Thank you so much for posting!!!

I sat in on a webimar 2 weeks ago with NGL and the carrier and an FMO about pre-paid funerals and no where in the 1 hour webimar did they go over such important factors! Thanks so so very much Newby and Ramiz for bouncing back this way! Yeah, when I called and emailed them with questions, my questions were unanswered. I know, shocker, right! Thanks again for posting.

Sounds like Ohio is a state where funeral homes can do pre-plans that are not guaranteed. Some states (Indiana and Kentucky are two I'm most familiar with) REQUIRE it to be guaranteed. Tennessee is one where the guarantee is optional.

One big problem is there are 50-states and 50-different laws. It would make it much easier if ALL states REQUIRED the guarantee and if all states would NOT allow any of the policies to be irrevocably assigned UNTIL Medicaid is applied for.

Your friends that told you the funds are "more tied up" if they purchase through a funeral home are just wrong. The NGL policy you are selling is exactly the same weather YOU sell it or the funeral home sells it. Same with Forethought, Homesteaders, Monumental, NGL, FDLIC, Invertors Heritage and all the rest of them. No one has control of the policy except the insured and/or owner of the policy. The only difference is the "guarantee" from the funeral home (if there is one.)

Most funeral homes will want better growth of the death benefit which will also be better for the consumer but will result in lower commissions for the agent. An agent that is not selling for a funeral home will care little about policy growth and will accept the 2% that seems to be the norm in order to maximize commissions.

I hate to hear stories such as the one about your aunt. If she were my aunt, I would check her original paperwork to make sure there was no mention of a "guarantee" when it was sold. I'm pretty sure there won't be one if that's the way they do theirs but if there is, I would go back there and enforce it.

I don't recommend that anyone preplan if there is no funeral home guarantee. BUT, in your aunt's case I bet she had a much better policy than the one's you and your friend are selling. And she had basically the same thing YOU are selling. A prepaid irrevocable trust with no guarantee that is easily transferable anywhere she wants and is exempt from Medicaid and she probably had 4% annual growth on the policy and she probably also had a 2-or 3-year period to pay it off with a same as cash option.

Here is what I would do if I were you. Your aunt probably prepaid her funeral at the same time she paid her husband's. I would take her to the funeral home and insist on a price guarantee in writing. If they won't do it, I bet every one of their competitors will and I would transfer it to them.

I agree that ALL states should REQUIRE the guarantee by law. There is no "oral" guarantees. It's either in writing or it doesn't exist.

As far as your other agent friends thoughts:
1. -No flexibility - Completely wrong. They can transfer funeral homes, cancel the agreement, take loans, cash surrender and do anything that anyone else with a whole-life policy can do. If they irrevocably assign it they can no longer take loans or cash surrender it (should NOT be done unless applying for Medicaid.)

2. -Your stuck with a funeral home - Wrong! You can easily transfer your policy to any funeral home you want any time you want and you don't even need to contact the funeral home that sold it to you. You can even cancel the funeral contract all together and just leave the money to your kids or any other beneficiary. If there was a price guarantee with the original funeral home, you will need to verify (in writing) that the new funeral home will also price guarantee it (some states require this, others do not.) If you irrevocably assign the policy you can still transfer it anytime to a new funeral home but you can not cash surrender it it leave money to anyone other than Medicaid or your estate (Medicaid gets the estate.)

3. -If funeral home runs out of business you have no control of where your money goes -Wrong! If the funeral home goes out of business, YOU select a new funeral home and transfer it to them.

4. -If you move out of state your money is stuck at the same funeral home - Wrong! Forethought, Homesteaders, Monumental, NGL, FDLIC, Investors Heritage etc. will pay any funeral home you want in any state. Or they will pay your children or spouse if you make them the beneficiary (unless you've been on Medicaid)

5. -Funeral homes will tell people that they lock in rates, but as time goes on, and inflation occurs, the family will be billed the difference in the DB to what the funeral home actually costs. Possibly! I'm sure in states where guarantees are optional, the funeral homes that don't offer them don't make a point of telling people that and consumers will assume that there is a guarantee. That could cause problems. Those states should have more consumer friendly laws or require very large print to disclose a non-guaranteed contract. BUT...you are saying the better alternative is a trust that doesn't have a guarantee anyway. So how is that better? The 2% growth rate? The irrevocable assignment when it's not needed? The overfunding in the first place when they will lose the overpayment to Medicaid if they go on Medicaid assistance?
Should a person who can buy a guaranteed funeral trust for $7832.54 opt for a $10,000 irrevocable trust that is separate from a funeral home? Not in my opinion.

But I agree some better disclosures and consumer guidelines would be of help to make sure consumers are preplanning safely and getting what they expect to get. Same with ALL areas of insurance though. I meet people every month at the end of their term life insurance and mad because they didn't understand it was...term.

 

[Newby]

An irrevocable assignment does not affect the transferring of a pre-need insurance policy. It only affects the ability to cash surrender it or take a loan against it or transfer it to someone other than a funeral home. You can easily transfer ANY insurance funded funeral preplan to any funeral home you want simply by signing a transfer form. The original funeral home doesn't even have to be contacted, the funeral home you are transferring to (or the insurance company) will supply the form. Irrevocable assignment does not affect transferability in any way except that you must always keep it assigned to SOME funeral home due to Medicaid laws. Once again, no one SHOULD irrevocably assign their pre-need policy unless they are immediately applying for Medicaid.

I agree that Ohio has very bad laws regarding Funeral Preplanning. When a state requires funeral directors to write them and does NOT require a price guarantee, you are going to have more than your share of problems. When funeral directors write pre-need, they USUALLY do it as a sideline. It is NOT their main focus. And they don't know that much about it other than the funeral selections.

Requiring a funeral preplanner to be be a funeral director would be similar to requiring your mortgage loan officer to be a building contractor. When it comes to closing, their focus would be on the construction of the home not the details and legalities of the purchase at hand.

When a funeral director sells pre-need insurance (I'm speaking in general terms here) they think the most important part is what casket and burial vault is selected. The goods and services page is everything to them. They usually can't answer basic questions about the insurance contract and legal matters relating to insurance.

I spent a couple of years training people to sell pre-need in Tennessee, Kentucky, Indiana and Georgia and it was a mix of funeral directors, funeral home owners and some professional full-time preplanners/insurance agents. While the funeral directors and funeral home owners are usually VERY nice people, they make horrible preplanners/insurance agents. They can't be bothered with details. They just want to know where to have people sign and how to calculate the payment.

If price guarantees are not consistent throughout a state, I can't imagine how rare it would be for someone to actually explain to a consumer "By the way, our prices are NOT guaranteed." And many consumers would never think to ask because they've seen the guarantee in countless advertisements from other funeral homes and would assume that applies to all funeral homes.

Your last paragraph is still not correct: "But there is still a place for irrevocable funeral trusts. People who must “spend-down” assets because of Medicaid, or people who are over 85 that want to transfer money to beneficiaries tax and probate free."

Any money paid into an irrevocable funeral trust will never go to beneficiaries (if they've been on Medicaid.) All excess money from a funeral trust MUST go to Medicaid or their estate (which Medicaid is the first creditor in line for the estate.) An irrevocable trust (that is NOT a funeral trust) may be a good way to do what you are saying but probably not for 85 year olds because it would have to be in force for 5-years or more before they apply for Medicaid to protect anything. Only an irrevocable funeral trust is immediately protected.

Once again Ramaz, I would love to agree with you about funeral trusts. Currently I only sell funeral trusts to the small percentage of people who happen to use the funeral home I represent in one very small town. If I could sell them to everyone anywhere, I would have a MUCH bigger customer base to work with. But at this time, I don't believe there is a good way to do it that is not detrimental to the consumer. I wish that were not true.

Hey Newby,
I think your right, OH does not require a guarantee. Although from talking to more people, the selling point is the guarantee, and then the Funeral Home hits the family with a bill after the funeral is said and done. Im not saying all Funeral Homes do this, but seems to me the masses do (at least in OH).

It also seems to me, from talking to people, that a lot of these policies, although written in a funeral home, are still Irrevocable Funeral Trusts with the Funeral Home as the Irrevocable Beneficiary and a third party as the Trustee. These are Non Transferable.

I guess from talking to you the best situation for a client to do for some funeral planning would be to go to the local funeral home, arrange your funeral, get the cost, set up a Pre-Need policy and get a Guarantee in writing.

If all these are not available and they are going to put you in a trust, its my opinion to go into a trust not irrevocably assigned to a funeral home.

But there is still a place for irrevocable funeral trusts. People who must “spend-down” assets because of Medicaid, or people who are over 85 that want to transfer money to beneficiaries tax and probate free.

You’re a great resource Scott! I honestly appreciate all your help!