Funeral Directors Response to the Attorney General's Questions.

Consumer Protection: Below is a list of questions (taken from the A.G.’s Consumer Alert) and answers given by funeral directors to help you make informative decisions regarding pre-need contracts or paying for anything in advance.

Question: What are you paying for?

Answer: You can prepay for both services and merchandise related to the funeral. Services may include: the services of the funeral director and staff for the arrangement conference and direction of the funeral; transportation of the remains to the funeral home; embalming and other preparation of the body; use of the funeral home facilities for the visitation and funeral; automotive equipment, such as a hearse, limousine and service vehicles; forwarding of receiving remains from another funeral home; immediate burials; director cremations and memorial services. Services must be purchased from a licensed funeral home. Merchandise may include: caskets; vaults; urns; headstones; printed materials, such as register books, acknowledgement cards, services folders and prayer cards. These items may be purchased from the funeral home or any one who chooses to sell them.

Question: Are you buying only merchandise, like a casket and vault, or are you purchasing funeral services as well?

Answer: If you are purchasing services, you need to purchase them from a licensed funeral home. Currently law prohibits anyone other than a licensed funeral home to provide you with those services. If you are purchasing merchandise, you can buy if from the funeral home who is providing you the services, or from anyone who is selling such products. Be sure to compare the costs.

Question: Who will eventually provide the services and merchandise you are purchasing?

Answer: Typically the funeral home with which you have contracted will be providing selected services and merchandise, unless you choose to change your funeral provider. Funeral homes provide these goods and services on a 24-hour a day basis, 365 days a year. If you have contracted with someone outside of a funeral home to provide merchandise, you should ask the salesperson who will be providing the goods when the death occurs. You should also inquire as to the availability of such goods on weekends and holidays, and how much time is needed for delivery. You will not want to alter your family’s plans because the casket can not be delivered in a timely fashion.

Question: What happens to the money you’ve prepaid?

Answer: Funeral homes are required to place 100% of your money into a trust or insurance policy in your name. This money, along with any interest it earns, is to be used to pay for your funeral at the time of your death. Cemeteries and other commissioned pr-need seller’s do not have the same requirement. You should ask the pre-need seller where money is deposited and secured for future use.

Question: Who are you dealing with? A licensed funeral director? A cemetery sales person? A commissioned pre-need seller? Who owns the firm? How long have they been in business?

Answer: this question should be asked by the family making arrangements because when the time the arrangements are needed, you will want to make sure you can contact that person or firm. If you are using a licensed funeral director, 100% of the monies will be placed in a third party trust or insurance vehicle, and it will stay there until the death occurs and a death certificate is produced to collect the funds. A cemetery sales person is a commissioned person and approximately 60% of the funds will be placed in a trust. If you are purchasing a casket from this person, it has been a practice of some cemeteries to give the family a warehouse delivery receipt and none of the money is trusted on this product. The question of who owns the firms should be asked so that the family can be informed if the firm is locally owned. There are a number of funeral homes and cemeteries that are owned by a large out-of-state or out-of-the-country conglomerates.

Question: What happens to the interest income on money that is prepaid and put into a trust account?

Answer: When doing business with a funeral home, the interest money stays in the account to cover the cost of the funeral services in the future. When dealing with a cemetery, this is not always the case.

Question: Are you protected if the firm you deal with goes out of business?

Answer: Yes. All Michigan funeral homes proudly comply with the Michigan law that allows the family to choose a successor funeral home if the original should go out of business for any reason.

Question: Can you cancel the contract and get a full refund if you change your mind?

Answer: You can always collect at least 90% of the original amount plus 90% of the interest earned. This depends on how you and the funeral home established the prearranged funds. The law presently allows the funeral home to collect up to 10% of the contract as a fee for doing all of the counseling and paperwork. This can be collected up front or at cancellation or some funeral homes choose less than 10% or none at all.

Question: What happened if you move to a different area or die while away from home? Some prepaid funeral plans can be transferred, but often at an added cost.

Answer: There are a variety of funding products – trusts, insurance policies, and in the case of some cemeteries, retail sales contracts – and each may have different provisions for deaths that occur elsewhere. In the case of trust and insurance policies, the death benefit remains the same regardless of where a death occurs.

Question: Are these arrangements Portable, Transferable and Refundable without penalty?

Answer: This is an important question. Trust established with funeral homes in Michigan are portable and transferable – between funeral homes and from state to state. There is a substantial difference in the refundability of trust and insurance. Insurance refunds "cash value" which is generally lower that a trust account. In Michigan trusts are 90% refundable with accumulated interest. Most funeral homes refund 100% with interest. Irrevocable trusts, established to meet Medicaid requirements, are non-refundable. Retail sales contracts, used by some cemeteries, are not specifically refundable and when refunded, only the original purchase price is returned. No interest accumulates to such accounts.

Question: Have you consulted your family, your religious, spiritual and financial advisors?

Answer: The planning of one’s funeral should be a personal choice. The consulting of certain people can benefit you in your final decisions. First including your family can help both you and your survivors, by understanding your wants and their needs through the funeral rite. Openness with religious and spiritual leaders will allow you to include your doctrinal beliefs within the funeral and burial rituals. Finally, awareness of your financial resources will let you select a pre-paid funeral that is reflective of one’s life style and also within one’s resources.

Question: Are you feeling "pressured" or hurried to make these arrangements or buy something before you really need it? If so, by whom?

Answer: the pressuring of selecting funeral merchandise, burial spaces, and/or funeral services should not be the basis for a person to enter into a pre-planned funeral contract. The selections of these items and their cost must benefit you the purchaser. You should know who you are dealing with, where they are located and finally are they operating within the guidelines of the laws governing pre-need contract and its funding. If you are not sure or they are not receptive to answering your questions and concerns DO NOT enter into any type of contracts. You may also want to contact someone that can help you research the proper information.