PrePaid Funerals: Protecting Your Funds

The FBI recently announced convictions of the top officers of National Prearranged Services. The company worked in 19 states, helping people put money for their funerals aside in trusts and insurance policies, and also purchasing prepaid trusts from funeral homes who needed liquidity, and purchasing life insurance policies instead. What the 92,000 victims didn’t know, was NPS officials invested those funds in risky investments, changed the beneficiaries of the insurance policies to themselves, and just plain kept the money for themselves. Victims included individuals, funeral homes, and insurance companies.  After admitting to the $450 million fraud, the company’s founder was sentenced to 115 months in prison, his son got 60 months.  In total, the six people indicted were sentenced to 46 years in prison. So why would you want to pay for a funeral in advance when scams like this seem so rampant? Fortunately, NY is the most regulated state in the nation with regard to funding in advance. By law, all prepaid funeral funds must be placed in an interest-bearing, FDIC backed- account, for which the planner is the sole beneficiary. The only way a funeral home or funeral director can touch those funds is with a death certificate in hand. Most New York Funeral homes use PrePlan, a non-profit master trust backed by the New York State Funeral Directors Association. All funds and interest remain the property of the planner, but by managing so many trusts, they tend to earn a higher interest return.  It has an A+ rating from the Better Business Bureau, and since the funds are always yours, you can move or remove* them at any time....

Funeral Ettiquette and The Mistress

In a recent column of The Ethicist in the New York Times, a reader posed a difficult question: A dying friend asked a man to ensure his mistress was able to attend his funeral, against the wishes of the man’s wife. What to do?  And what should you do when the people who are arguably closer to the person dying, and who know him or her better, are not the ones entitled to make final arrangements? Thanks to a little-known NY State Law,  anyone can appoint an agent to control the disposition of their remains.  This form doesn’t need to be witnessed or even filed with a clerk, and can be revised as often as desired. When first made law, it was intended to help protect gay couples who were being kept from making such decisions or even attending the funerals of their loved ones.  However, in practice, it has had much larger implications: a man can appoint his mistress over his wife, a mother can appoint one child and not the others.  The only area that it gives that person control is in the final disposition- so it doesn’t make you executor of a the will or the controller of the bank accounts. But it can help people ensure their final wishes are carried out in the manner they desire As for the Ethicist- I agree with the writer. If the mistress’ presence will upset the family, she should keep her distance. The funeral is for the family, and they deserve to mourn without distraction....

Funeral Home Price Lists

Did you know funeral homes are required by law  to present you with a General Price List (GPL), Casket Price List (CPL), and Outer Burial Container Price List (OBCPL) whenever they are asked for, and before discussion of any services, goods, or prices takes place? This is a federal law. In fact, the law even dictates how the price lists are structured, mandates certain disclosures, and mandates where on the price list the disclosures must be placed. Funeral homes are not required to mail price lists to people who inquire by phone, but they are required to disclose prices by phone and provide price  lists when such inquiries are in person, regardless of whether or not the person inquiring has lost a loved one, is a competitor, a journalist, or otherwise. Many funeral homes do mail their price lists upon request, and many even wisely publish their price lists on their websites. And when they don’t, they can get in a heap of trouble. A Westchester County funeral home learned this the hard way: John Balsamo, the owner of the Harrison Funeral Home was fined $32,000 and subject to two decades of increased mandated reporting as part of settlement of a lawsuit brought by the U.S. Attorney after they found repeated violations. The U.S. Attorney said the firm was first warned in 2001 that federal authorities knew they were not complying with the FTC Funeral Rule. However, undercover investigators were not given the price lists in four separate incidents in 2010. In a consent decree, the firm admitted to also failing to enroll employees in educational programs intended to prevent such violations.  John Balsamo owns...

New York Medicaid Lookback Period

The New York State Medicaid Lookback Period is one of the most obvious examples of how failing to plan can really hurt a family. More and more, people find themselves and their family members struggling to pay for the costs of long term care.  Sadly, nursing home costs are so high that after a while even the most seemingly “well off” families can find themselves turning to Medicaid to cover the cost of care. The two most frequent problems I’ve seen as a funeral director are this: the family doesn’t understand that, when determining eligibility, New York employs a five year look back period for your assets.  Many people confuse IRS gifting laws with New York Medicaid Lookback Period Laws.  The IRS may allow you to gift away money without penalty, but those gifts are counted against you if they are made during the five year Medicaid lookback. Even more heartbreaking, I see families fail to take funeral expenses into account when doing their “spend down” to become Medicaid eligible. It’s a scenario that plays itself out, over and over again throughout the state.  A parent dies in a nursing home after having exhausted all of their  assets, and instead of getting an inheritance, the children find themselves reaching into their own pockets to cover the cost of funeral and burial expenses. There’s a great article which details how the New York Medicaid Lookback Period affects the estate planning process. No one wants to, but it’s important to have difficult conversations with those you love, long before the need arises. Make sure those conversations include clear statements about what your...

Funeral Industry Advertising Still Gets a D

The more things change, the more they stay the same, don’t they?  Well, it’s true in the funeral industry, that’s for sure. In 2007 I wrote a guest blog for Tim at Final Embrace about how terrible funeral home advertising is. Very little has changed- there are still too many funeral homes which lack websites, have no social media presence, and rely on the yellow pages for people to find them. These are likely the same funeral directors who will argue that the most valuable funeral is a traditional service followed by a burial, and rigidly rail against the rising cremation rate and its impact on the bottom line. How’s that working out for you? Are your margins still decreasing? What’s your call volume like? We all know that funeral directors aren’t known to be early adopters of anything. However, it’s time to smell the spider mums before your competitor does. Research shows that when people are dissatisfied with a service or experience, they will tell 15 other people about it, but if they have a compliment they will tell only 3: and that’s when a situation isn’t emotionally-charged like a funeral.  That’s not to mention how frequently grieving families have a captive audience of friends and family around them, meaning their complaints and praise have a very broad range. Does complaining about the rain keep you from getting wet? So how will clinging to the past help you attract today’s savvy consumer? If you want to capitalize on every dollar they’re willing to spend, you have to be flexible and creative, or they’ll spend that dollar at your...