R.I.P. Off? Pre-Need Regulations Have Increased, But Critics Say Not EnoughJackson, Miss – Since Secretary of State Delbert Hosemann took office, his agency has seized five Mississippi cemeteries for mismanaging funds, a scenario that’s playing itself out across the country.
Critics of the pre-paid industry contend that’s because oversight has been poor, and despite states’ efforts to beef up laws, there is still plenty of room for fraud.
Hosemann said he is working to prevent it.
“Misapplying trust funds from someone’s funeral arrangements is literally grave robbing,” Hosemann said. “It is unfortunate that we have to go after these companies in court to recoup the money that is missing.”
That, he pointed out, costs taxpayers.
He said a law the state Legislature passed last year provides greater industry oversight. Mississippi providers must now not only report to their districts’ chancery courts, but to the Secretary of State’s office.
The law, among other things, says the Secretary of State’s office must:
* Read and approve any pre-need contracts before they are sold.
* Approve trust agreements.
* Allow only cemeteries or funeral homes to be licensed providers.
* Require providers to file an annual report on trusts showing the balance and investments.
* Raise the maximum penalty for violations from $5,000 to $10,000.
* Establish a fund that takes $10 for each pre-need contract sold after July 1, 2009 to go into a last-resort fund to pay the claims on insolvent cemeteries.
* Raise the required amount to start a perpetual care cemetery from $5,000 to $25,000
Josh Slocum, director of the nonprofit Funeral Consumers Alliance, said state laws, including Mississippi’s, still give providers the upper hand. Although he acknowledges that many people have had good experiences buying pre-need plans, it’s just not worth the risk, he said.
“Pre-need regulation is in a shambles nationwide, and my advice to any consumer is ‘don’t do it.'”
Buying a pre-need plan to take the burden off survivors is “exactly the right thing to do but exactly the wrong way to go about it,” he said.
Unless a person is trying to pare down assets to qualify for Medicaid, Slocum recommends that people set up private funeral-needs accounts, and if they insist on buying a plan from a private company, have an attorney or accountant look it over carefully.