You may find yourself wondering what actually happens to money used for preplanning and paying for cremation services ahead of time. We’ve put this blog together to explain a little more about how the process works. Each state has specific rules and regulations that may vary, but the State of Ohio requires that a funeral contract including funeral goods and services, and or cremation services, may only be sold by a licensed funeral director. All money prepaid for funeral goods and services needs to be held in a trust for the benefit of the person for whom the contract is made. Funds can be trusted in a life insurance trust, annuity trust, or a financial trust.
A funeral trust is an agreement that a person enters with a third-party company that states they will hold the funds to be used for all the final expenses related to the final disposition after the individual passes. At Best Cremation Service, we use an insurance trust that is underwritten through National Guardian Life Insurance Company, an “A” rated (Excellent) company through AM Best.
We’ve listed a few key points about these trusts below:
- An insurance trust can be either a single premium payment or a monthly payment for the costs of the funeral goods and services and or cremation services. These installments provide insurance protection and pay the face amount in the event of premature death before all payments are completed. Monthly installment options are available for 3, 5, 7 and 10 years.
- A pre-need funeral trust may be written as a revocable or irrevocable contract.
- These trusts can also be written as price guaranteed, which protects the individual against future price increases.
- If desired, a client may transfer their trust to another funeral provider. However, any guarantees in the funeral contract do not have to be honored by the receiving funeral home.
- You have the right to review an insurance trust for a period of 30 days without any cancellation fees. Cancellation after the 30-day free look period may be subject to a surrender charge.
- An irrevocable trust cannot be canceled, however, as stated above, it can be assigned to another funeral provider.
- Trusted pre-need money is protected from creditors and or probate court.
- The State of Ohio requires that all funeral trusts be recorded with the Ohio Board of Embalmers and Funeral Directors.
- In addition, every pre-need contract whether it is funded through a financial trust or insurance trust must contain a detailed set of disclosures and services provided.
Visit our website to get a free quote or give us a call at (513) 991-1369 to discuss any questions you may have. Our team is always available to help.
*This information only pertains to the State of Ohio.