Will State Laws Protect Your Funeral Prepayments?
As discussed above, funeral trusts and insurance involve making payments to third parties who will manage your funds until the time of the funeral. You might also pay in advance for products and services by remitting directly to your funeral service provider or cemetery. Prepayments may be made in a lump sum or on an installment basis.
State laws govern how these prepaid funds can be used. Most states have laws requiring that providers set aside a certain % of funds received in advance in a trust account. This pertains to goods and services that are promised for future delivery. However, the trusting requirement can vary from 30% to 100% and the provider manages the trust. You should be cautious about making prepayments directly to your provider if the purchased items are not to be immediately delivered, especially if the trusting laws in your state are lax.
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