Pre-Need Contracts - In the News
With the arrest of another Macomb County funeral director for alleged pre-need trust violations, consumers should be asking the question, “Is my pre-paid funeral safe?”
Michigan law requires that:
- A funeral home have a valid Michigan establishment license and be managed by a licensed funeral director. If in doubt, ask to see current licenses.
- All pre-need monies be placed into a third-party escrow account within 30 days of receipt. Pre-need funds may also be used to purchase limited life insurance policies, in which case the consumer should be fully aware of the insurance product.
- The consumer receive receipts, copies of all contracts, a general price list, and the name and contact information for the trusting entity or insurance company.
- Normally, the consumer will receive an annual statement of income (similar to a 1099 or K-l form). If you are not receiving such a report each January, you should know why. (Insurance contracts and some trusts are exempt.)
- The consumer has the right to cancel or transfer a pre-need account and receive 90% of principal and interest back at any time for any reason.
Contracts with cemeteries fall under different laws and are often more difficult to cancel or transfer. When such contracts exist, be sure you know exactly what has been purchased.
If you have a pre-need contract, or believe that an older family member has one, be sure you have paperwork and know exactly which funeral home is involved. We occasionally hear from families who state that “Dad always said everything was taken care of”, only to be unable to locate paperwork or any local funeral home with knowledge of the case. If you have indeed pre-paid a funeral and don’t have paperwork, you have a serious problem. If you believe you have been the victim of pre-need fraud or misrepresentation, you should immediately report it to the proper authorities.
