Pre-Payment Options

PRE-PAYMENT OPTIONS

There are a growing number of options available to the public today when seeking to preplan and prepay their final wishes. We can tailor a plan that's right for you, designed to meet anyone's budget concerns.

When it comes to pre-funding, New York leads the way as one of the country's most consumer-friendly states due to its strict regulation.

New Yorkers, like all consumers, understandably want to be sure the funds they set aside in a preneed trust account are safe and secure. The following is a series of fundamentally important questions about the protection of preneed funds, with the answers provided jointly by the five licensed funeral directors who serve as Trustees of NYSFDA's PrePlan Trust Fund.

How does New York State protect preneed funds compared with other states?

Trustees: Consumers in New York who prefund their funerals have their money protected by what are truly the strongest preneed laws in the nation. These laws require that 100% of such funds be deposited in an interest-bearing, government backed trust account where the principal and interest earned remain the property of the consumer. The purchaser remains in control of the preneed account. If the account is revocable, a purchaser may request a full refund of the principal and interest earned at any time, for any reason, without penalty. The purchaser may also select a new funeral home at any time. New York State law also mandates full disclosure to the consumer by requiring that written statements be sent containing information on the funds deposited to date, where they are deposited and interest earned.

Under New York State law, applicants or recipients of Medicaid or Supplemental Security Income (SSI) may set aside funds in an irrevocable trust account for the sole purpose of paying their funeral and burial expenses. The funds in an irrevocable funeral trust are exempt from being counted as a resource. By law, funds in an irrevocable trust account cannot be refunded, but the purchaser may select a different funeral home at any time.

What is the difference between a revocable preneed account and an irrevocable preneed account?

Trustees: In New York State an individual applying for Medicaid or SSI may set aside funds in an "irrevocable" account for their future funeral/burial expenses. The funds in such an account are considered an excludable asset in determining program eligibility. The account must be established as "irrevocable" if the beneficiary has applied for or is receiving Medicaid or SSI. Funds set aside in an irrevocable account may not be refunded and any funds remaining ("overage") in the account after payment is made for all funeral services and merchandise must be forwarded to the appropriate agency of the county where the beneficiary was residing at the time of death.

Again, in contrast, a revocable account in New York State is fully refundable upon demand. Any overage remaining after the funeral services and merchandise have been provided must be forwarded to the estate of the beneficiary.

Both irrevocable and revocable preneed accounts are totally portable. A purchaser may later decide to use a different funeral home, even if in another state, and is free to transfer the funds there without penalty or cost at any time.

May a funeral director charge a fee for planning a prepaid funeral?

Trustees: No, in New York State, funeral directors cannot charge a consumer any fee for prearranging a funeral.

Are there any fees associated with planning a prepaid funeral?
Trustees: Yes, PrePlan, like any preneed funeral trust, is permitted by law to expend up to seventy-five hundredths of one percent (.0075%) of the principal sum in the fund to provide management and administrative services to operate and staff the fund. A minimal fee is also paid for the expert investment advice given to PrePlan for the benefit of its customers. Of course, these terms are fully disclosed in the preneed agreements and provided in detail to consumers annually in a Grantor Trust Tax Information Statement.

How does a funeral home get paid from the PrePlan Trust Fund?

Trustees: PrePlan requires receipt of a certified death certificate. After verification of authenticity, the full balance in an account including interest accrued will then be disbursed by check or electronic fund transfer to the funeral home listed on the death certificate. PrePlan's strategy of investing in long-term, jumbo certificates of deposit (CD's) has resulted not only in maintaining the safety of consumers' funds, but a historical rate of return that has routinely been able to offset inflation.

How long has PrePlan been serving its member funeral homes in New York State and their consumers?

Trustees: PrePlan is the funeral sector's leader in preneed funeral trust fund management. We maintain preneed funeral accounts for over 70,000 individual consumers. PrePlan was established in 1988 as a member service of the New York State Funeral Directors Association, the oldest funeral directors association in the United States.

What safeguards has PrePlan implemented to guarantee the safety and security of the funds entrusted to them?

Trustees:

• PrePlan invests solely in certificates of deposit. With the hands-on assistance of a well- respected investment advisory firm and five PrePlan Trustees, investments are made with a large, diversified group of thoroughly researched, highly-rated banks. Each PrePlan trust account is FDIC insured up to $100,000.
• PrePlan is audited on a quarterly and annual basis by an independent auditing firm. This includes a thorough internal controls evaluation designed to identify and eliminate any potential areas at risk for fraud.
• PrePlan has a firm commitment to the confidentiality of all sensitive consumer information. We employ the strongest security protection for our website, and routinely shred all documents containing such personal information.
• NYSFDA added yet another layer of protection through the formation of a standing Audit Committee comprised of individuals who are knowledgeable in finance, business management and accounting, and well-equipped to wade through complex financial statements and audit reports on behalf of our member funeral homes and their consumers.

For more information on preplanning a funeral, please visit www.nysfda.org, or call PrePlan directly at 1-800-577-3752.

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