Through the years and in all parts of the state, untrustworthy funeral merchants have taken the money and ran. A worthwhile project for the 2016 Legislature would be to tighten the reporting requirements for this industry.
The vast majority of operators are worthy of the trust families place in them. It’s the few who aren’t that cause major headaches, lots of heartache and a financial mess for state regulators to sort out.
Sadly and unfairly, funeral directors have never attracted much status in society. They are there when we need them, providing care, essential and professional help. The rest of the time we don’t think about them. Our mortality is a topic we choose to ponder as little as possible.
And that’s what opens the door to abuses.
Prepayment of funeral expenses is not a new practice. Plans have been offered, in one form or another, as long as there have been funeral homes.
The idea is appealing for a couple of reasons. One is to assure that the expenses will not be a burden for survivors. Another is to assure a quality burial in a preferred location will take place.
The common name is “funeral insurance,” but there are many, many variations.
The least problematic are plans that are, in fact, insurance. Individuals purchase policies from companies that may or may not be affiliated with a specific funeral home. Upon death, the face amount of the policy is paid as directed to cover all or part of the costs incurred.
The most problematic are trusts. Some people selling them defy the definition of “trust.”
One attraction of a trust over an insurance policy is that it “fixes” costs. A person selects a casket and a burial plot and anything and everything else associated with a funeral. Then he or she makes one or more payments to a funeral home “trusting” all those services will be provided — even many years in the future — at no additional expense to survivors.
Mississippi law now requires the sellers of such trusts to place 85 percent of the total amount in a reserve by the fifth day of the month following purchase. In theory, these trusts benefit funeral homes quite nicely. When the time comes and a funeral is provided as ordered, the funeral home can draw out the initial deposit plus whatever interest or other earnings have accrued.
But all that depends on funeral homes making the 85 percent deposit in the first place.
Sometimes, it appears, they perform a nice accounting ballet around that provision.
Last month, representatives of Secretary of State Delbert Hosemann’s office were in Grenada meeting with about 100 clients of National Funeral Home.
The owner had died and certain realities were coming to light.
One was that people who had chosen the insurance policy option were in good shape.
Another was that for approximately 50 clients with trust-based plans, funds remained available.
For about 90 though, some of whom had put money into “trusts” as long as 15 years ago, there was simply no money. Gone. Zero. Disappeared.
A news release from Hosemann’s office said examiners determined “the funeral home failed to pay into trust proceeds” from those purchases. There’s no provision for the state to cover this. If the money is not there, it’s simply not there.
Hosemann and previous secretaries of state have dealt with this in several communities across Mississippi, and it’s not uncommon in other states, either.
So why has the Legislature not acted? Why is there no law requiring that anyone selling funeral trusts provide evidence of secured and fully funded accounts each year? Good question.
The default — and too easy — answer is that the funeral industry has a powerful lobby. It does. But given that so few operators abuse the process — or get caught underfunded — wouldn’t it seem the good guys would demand controls to protect their reputations?
Maybe, but the more likely answer is a general loathing of regulations and regulatory processes. “We” shouldn’t be audited because “they” were in violation. Maybe it’s time, though.
Several other states do require trust-sellers to file annual reports proving that money has been retained as required. Fraud still happens in those states, but perhaps on a smaller scale.
Lawmakers gathering in Jackson this week won’t have adding more regulations to private businesses as a priority item. But there are many families in Grenada, and others scattered around the state, who wish they would look at this. A modicum of consumer protection would go a long way.
Charlie Mitchell is a Mississippi journalist. Write to him at email@example.com.