ESTATE PLANNING: PREPAID FUNERAL AND CEMETERY PLANS
(THE NEED FOR CAUTION)
Estate planning and elder law attorneys have forever urged clients to plan ahead and to review both traditional probate matters and issues like disability and Medicaid planning beyond routine matters. For many years, our clients have been buying burial plots in advance primarily to ensure that family members can be buried together, but also to avoid unanticipated expenses and to relieve family and friends of burdens of decision making and expense.
Our clients need to be aware that two Illinois statutes cover pre-need funeral and cemetery contracts. One is the Illinois Funeral Or Burial Funds Act, 225 ILCS 45/1 et seq., regulating pre-need funeral contracts, among other things. Another is the Illinois Pre-Need Cemetery Sales Act, 815 ILCS 390/1 et seq.
The Illinois Funeral Or Burial Funds Act covers pre-need funeral services and equipment contracts. The law provides that sellers of such contracts must be licensed, the contracts must have been approved by the office of the Comptroller as conforming with the law, and a booklet from the Comptroller's office describing the purchaser's rights must be included in the transaction. Additionally, the proceeds from the sale must be held in a trust, life insurance policy or annuity, which is contrary to what many people believe about the sale of prepaid funeral plans. There is also a three-day period in which the consumer is allowed to cancel the contract, governed by the Federal Trade Commission rules.
Our clients need to be aware that if they review a funeral contract and it does not cover all of the anticipated costs of the future funeral, the contract is required to acknowledge this limitation. Therefore, look in the contract to ensure that it says that it is a "price guaranteed" pre-needs contract. Additionally, the seller must be either a licensed funeral services provider or must have a permanent contract with a funeral home in order to guarantee the delivery of the services for which the seller contracts.
In the case of pre-need cemetery sales, the Illinois Pre-Need Cemetery Sales Act governs cemetery services and equipment, much like the pre-need funeral services law. In the case of cemetery services, the seller must be licensed with the Comptroller's office, and 50% of the proceeds must be held in a trust fund. However, the seller of the contract must deposit $5.00 with the Comptroller's office on each sale to fund the Cemetery Consumer Protection Fund, which reimburses those people who have been defrauded in such transactions.
The pre-need cemetery contracts must be on a guaranteed price basis. Therefore, the law does not allow for any extra charges to be later levied for anything covered under the contract.
It is always important to review contracts for services to be provided in the future. It is more important in this day and age because of the impact such contracts may have on those you love and those you care for, long after the contract is signed. If we can be of service in reviewing those contracts with you, please call on us.
Marc D. Sherman, marc@mshermanlawoffice.com
This article is intended to highlight areas of interest for our clients and others. It is not intended to be legal advice and it is not a substitute for advice and consultation with your lawyer.