I have noticed many funeral
homes have a token 'Happy
People Having Fun'
photo...so here's ours...this
is the wifely woman Carol
with Swan Quarter, NC
Funeral Director Steve Bryan
at the Oregon Inlet. This
particular day there were
mosquitoes the size of
hamsters encircling us...
"I have always loved the story of an elderly gentleman who had burial plots on both coasts. The family kept after him to tell them where he wanted to be buried. He thought for a moment and then said, 'Surprise me.' We walk a fine line between knowing what we want to happen at our own funeral and forcing some hard decisions on our family. Conditions change, situations become altered and suddenly the family cannot fulfill all of the requests we have made. Many a family lives with long-term guilt over failing a loved one in this area.
The answer to this is to make general plans. Have a family meeting so everyone has a voice in the plans and understands what is to happen, and then make clear that it will be all right if changes have to be made.
I cannot emphasize this enough that family unity is priority number one. The only way to avoid misunderstanding is to have an understanding. A family discussion is in order."
- Doug Manning
Excerpted from Building Memories: Planning a Meaningful Funeral
With permission from Insight Books, Inc. © 2002 | www.insightbooks.com
I get questions all of the time about Preneed plans and arrangements...
To begin with, there are 2 different types of preneed plans - IRREVOCABLE and REVOCABLE. The irrevocable meaning that the funds cannot be used until death occurs. The revocable is pretty self-explanatory; essentially, the funds can be retrieved later if needed. This is probably a good time to mention that preneed plans may be transferred between firms. The NC State Board of Funeral Service will oversee your preneed contract and serve as the regulatory agency over preneed. When you are handing over funds to be used on a service ahead of time, there will have to contracts written and signed, and a clear understanding as to what will be provided. The NC Board of Funeral Service has a $20 filing fee for a preneed contract. We file a report with the Board at the end of each year to show interest/balance amounts, and the Board inspects our records each year.
PRENEED: understand what you are doing, signing, and expecting...
This is designed to explain preneed funeral funding... please read and understand it clearly, and ask any questions of the Funeral Director that you may have.
To start with, there are several statements that need to made to understand preneed funeral funding in North Carolina:
*The purpose of prearranging and prepaying for a funeral is to gain interest in a funding source to offset the rise in cost of a funeral. The purpose is not to shelter money and get a refund back. Some preneeds do have a refund available, but monies are required by law to be refunded through the local Clerk of Court.
*There are two types of contracts, Standard and Inflation Proof – have a clear understanding of what you are trying to accomplish before you select the type that suits your needs best. The Funeral Director is not going to recommend one over the other. You must make that determination.
*Funeral costs do rise each year. The funeral home, the casket companies, the vault companies, crematories, grave preparation company, sales tax, etc... all have issues of transportation and overhead costs. Some years, a particular segment of that may stay the same cost for a year. It has been our experience though that the merchandise sector of caskets, urns and vaults changes at the end of each year. Sales tax has been unpredictable also.
*Families who bring in an outside insurance policy for beneficiary assignment to the funeral home, have no way of making the policy Inflation Proof. We cannot be responsible for policies sold outside of the funeral home. Many of the insurance policies do not have any growth – they are bought for $5000.00 death benefit and they are worth $5000.00 in death benefits many years later. IF you assign an insurance policy to us, we cannot be responsible for this rise in cost.
Now that those issues are clear, here are some explanations on preneed.
- Regulation – In North Carolina, the State Board of Funeral Service oversees and regulates preneed law. If you ever feel like there is any malfeasance, or something wrong with your preneed contract... call the State Board at 1-800-862-0636. The preneed carries a $20 filing fee paid to the State Board at the time the contract is signed. The funeral home is required to file a yearly report showing interest, and is inspected annually for an inspector to see both open and closed preneed files.
- Revocable and Irrevocable Contracts – You can make the contract revocable and get to funds later if person wants to revoke the contract. Many people receiving certain types of public assistance have to make theirs irrevocable in order to qualify for the public assistance. Irrevocable does mean that the funds cannot be taken out until death occurs, or a court order releases them. Understand these types clearly and what you are trying to accomplish before signing.
- Use of Funds – For the most part, Washburn & Dorsey Funeral and Cremation Service uses First Citizens Bank for probably 10% of preneed contracts. First Citizens provides us with monthly updates on interest. Understand that the funeral home does not have access to these funds until death has occurred. The funeral home cannot use these funds to borrow on, or use in any way.
The advantage to the funeral home is at the time of death, the funds and their available amount are quickly available. For 90% of our preneeds, we use Columbian Life Insurance company if an insurance product will serve the situation better. North Carolina law does allow (and this part of the law is the only bad part in our opinion) for the funeral home to retain up to 10% of the original deposit amount for “administrative costs”... However, when signing the contract there is a portion you will have to initial that indicates if the funeral home is holding any portion for administrative costs.
We want the full amount in the bank working for the consumer and the funeral home and do not hold any portion out. Families who buy outside insurance policies need to understand fully the policy information – if there is a contestable or graded benefit period following purchase – then the possibility exists that the insurance death benefit will not pay the full amount if death occurs within a certain time frame after purchase.
Also, consumers who purchase monthly, quarterly or annual pay insurance policies and fail to pay the premiums, must know that the policy could lapse and not pay the amount of death benefit.
- A check, please - We will only accept checks to pay preneeds. This way, a paper trail can exist in the person's file, showing each check. In the case of a bank preneed, the check is made out to the funeral home, but the funds are NOT deposited in the regular funeral home account, the check is endorsed and the sent to the bank for the creation of a new account, or an addition to an existing account. In the case of an insurance preneed, the check will be made to the insurance company.
- State Board Filing Fee – The state board filing fee check of $20 has to be paid separately, again, providing a paper trail of the paid amounts. It cannot be accepted added to the funeral deposit amount on one check. No.
- 2 Types of Contracts: Standard and Inflation Proof – If someone is just setting funds aside without making any selections – they will have to do a standard contract. If someone is is paying a portion of a funeral contract and not the full amount, they will have to do a standard contract.
A standard contract means that the consumer will be responsible for any rise in cost of the services and merchandise they have selected on their preneed – and it goes back to what was said earlier, it will go up each year. However, at the time of death more money exist in the contract than the funeral amount, a refund can occur – but all funds have to be routed through the Clerk of Court. Probably 90% of our contracts are standard contracts.
If a family wants to select a service and merchandise, pay in full and know they will not be liable for the rise in cost, an inflation proof contract is what they need. In this case, the funeral home agrees to take the risk for the rise in cost, however the law allows the funeral home to keep all proceeds.
Let's use some examples... a family selects a standard contract and the funeral amount is $7800.00. They deposit $6000.00... years later upon the person's death, the same funeral has climbed to $8100.00, and the bank amount with interest is $6300.00... the family will either need to pay the $1800 difference or make changes in their selections to an amount within the preneed funds.
On the other hand, maybe they deposited the $7800.00, and at the time of death, $8400.00 is in the bank, and the funeral cost is $8200.00... legally, the funeral home could pay other funeral related costs for the family, flowers or paid obituaries with those funds, or it can be refunded by way of the Clerk of Court. If the family has selected an inflation proof contract on a $7800.00 funeral, and at the time of death, the same funeral cost $8100.00 but the bank amount is $8000.00... the funeral home agrees to provide the services, the same merchandise, etc... for the amount in the bank.
The funeral home will provide to the family an updated statement and General Price List showing current charges and what is paid. The funeral home is not agreeing to keep their charges at $7800.00 forever, which is what I find some folks think, it is agreeing to take the risk of the rise in cost. By the same token, if at the time of death the funeral amount is $8000.00 and the amount in the account is $8100.00, legally, the law allows the funeral home to keep the full amount for the “risk taking” situation. Often, I hear someone refer to an inflation proof contract as freezing the price – and I don't think that is an accurate description of what an inflation proof preneed does – because technically the prices continue to rise as with any other preneed. They are not “frozen”.
What an inflation proof means is for the items that have been selected, the cost will be covered by the funeral home. Again, the funeral home is accepting the risk for increase in cost, but be assured, the cost will increase. An $1800.00 casket in 2016 will increase to $2300 in the year 2020 maybe – but if on an inflation proof contract – the funeral home is paying for it.
- How you will know what the prices are years later – Each funeral home is required to give the family during arrangements (either preneed and at the time of death) a copy of their General Price List... this list will show the current charges for the items selected. In our case, it will also show the casket and outer container lists. Funeral homes do not warehouse or store a casket that is selected at the time of a preneed. If a consumer chooses a certain casket, the information is entered on the contract – at the time of death if that particular casket is not in the funeral home’s inventory, it is simply ordered.
This way, new merchandise is provided at the time of death and not something stored away for years. Also, really there would not be a funding way for the funeral home to buy the casket to store it. Funeral homes do not have access to the funds that are in the bank or insurance policy for a preneed. If a casket has been discontinued, we are required by law to replace it with a similar unit – and it will always be the best idea to get the family's blessing on any casket used in place of another one if it no longer exists.
It is very common for funeral homes to change out their casket inventory over the years – some caskets just don’t sell well and need to be replaced, and some are in a position cost wise that it needs to be replaced, but very often the funeral home still has easy access to order and get delivery of a casket they no longer keep on hand.
- Slow down, and understand it – In most cases, you can take your time and do your best to understand all of the preneed information. Most of the time, if someone is pressuring you to sign quickly, it is not a good deal. So take the information home, write down questions and understand it.
There are times a family is pressured to hurry with a preneed because of the public assistance application/assets situation mentioned earlier – but they still need to clearly understand what they are getting. The only time the funeral home will mention any “hurry” , is if a family is quoted a price and it is close to time that prices will rise on the General Price List. Once a General Price List is printed, dated and distributed – those prices must be the ones reflected on any statements.
So while the funeral director will never be in a hurry to tell you to, “Sign here now!”, there are times it may be best for cost purposes to get interest started, and depending on the type of contract, may or may not benefit the consumer.
- Take time and read the contract you are signing… Often, when we do preneed contracts and arrangements, only particular parts are given a detailed explanation during the signing process, these include the revocable/irrevocable portion, the 30 day notification to the consumer situation, and areas concerning the contract blanks related to the bank portion. If you need time to read the entire contract (the back page has a tremendous amount of information) please ask the Funeral Director for time to pour over it and you can be left alone to read as long as you want to.
- What's in it for the funeral home? The main benefit to the funeral home in the case of a preneed arrangement is that it provides almost immediate payment for our charges. It seems to relieve the family of some worry at the time of death that the finances have been planned for, and sometimes it is beneficial to the funeral home to know choices ahead of time (so we can order merchandise not in stock, but needed) and know payment is available. In many of the insurance related products we offer, the funeral home does receive a commission on the sale of a preneed policy.
- This is an agreement of “trust” and should be treated as such… There are some great laws in North Carolina to protect the consumer in doing a preneed contract. However, it is the firm belief of this funeral home, that you should not sign anything related to preneed or write checks to be used for a service provided by this funeral home – if you do not have complete trust that this firm is handling this in the consumer’s best interest and attempting to help you with this situation.
We are honored you called and came to this funeral home to inquire about preneed, but only proceed if you think this agreement has been adequately explained and you are adequately protected. Taking a check to a funeral home and handing over funds to be used for services in the future should only be done when you have complete trust in that particular firm.
Preneed is regulated in North Carolina by:
North Carolina Board of Funeral Service
1033 Wade Avenue, Suite 108
Raleigh, NC 27605
Preneed contract signing checklist, you will need to have these copies in your possession after completing a contract:
*Standard or Inflation Proof Contract (if bank preneed, the lower right portion will have to be completed by the bank when they receive the funds and contract, and a completed copy mailed to the consumer later, but initially, a contract should be provided)
*Statement of Funeral Goods and Services Selected (the State Board requires this even if the consumer did not make any selections, Funeral Director writes, “No selections made” on the contract.)
*Copies of checks, a copy of the check for payment for the preneed, and a copy of the check made to the State Board for the filing fee should always be included…
*And… in our case a handy dandy copy of PRENEED: understand what you are doing, signing and expecting… which is the copy you have just read…
MOST IMPORTANT OF ALL, preneeds must, must be done by appointment. We are a small funeral home, and a licensed Funeral Director in the State of North Carolina MUST make the arrangements with you for a preneed. Since I am a one man operation here, I bolt out the door to do errands many times during the week. I may be getting death certificates, retrieving a tent from a cemetery, or indulging in a hot fudge cake somewhere. When we are busy, I don't have time to make many preneed arrangements. So is it imperative that a family call and say, "We wanted to come Thursday night at 7:30pm...", that's okay if the schedule isn't busy here. I don't mind meeting at night or weekends; not a problem - I'll be glad to work with you. I just have to know several days ahead of time that you are coming. It takes a little planning on my part, and a lot of time to draw any contracts up. But I am amazed at the number of people who show up on the doorstep here wanting to talk preneed and they usually say, "We've been thinking about doing this for several weeks..."
I hope you find this information helpful - please feel free to give me a ring if you have more questions or would like to schedule an appointment.
In addition, arrangements can be made in the comfort of your own home by clicking the button below. Fill in as much as you are comfortable with and I'd be pleased to meet with you to discuss further. See the form below for details.