Due to changes in the law, effective July 1, 2014, and new regulations, effective January 1, 2015, it is necessary for all Certificate Holders using a merchandise and services trust or an endowment care trust to evaluate the trust agreement in place, make necessary changes and then file the revised agreement for approval. We recommend that the trust documents be sent for a precursory review, prior to executing the agreements, so that the Board may suggest changes. Then, once you have a received preliminary approval, the executed trust agreement should be filed with the Board. Regardless of whether any changes are made, all executed trust agreements are required to be filed with your 2015 renewal package, due on July 1, 2015.

In Lieu of Trusting

Because current trust agreements must be revised and filed for approval, this is the perfect time to evaluate your trust/trustee relationships and how well your current arrangement is meeting your needs. There are a number of trusts/trustees that specialize in the Preneed Industry. In fact, most if not all of these specialized trusts/trustees, have a significant relationship with the Board and either perform or contract with someone who performs, all of the Board’s record keeping requirements for you, such as providing a log with all required information at the contract level, providing statements of trust activities to coincide with Board deadlines, and files required documents on your behalf, such as preneed contracts and trust documents. These specialized trusts/trustees are indispensable. The services provided to you are paid for by the trust fees charged to your trust’s earnings/interest as any other trust/trustee relationship. For the most part, the fees charged to trusts by trustees specializing in Preneed trusts, are comparable to typical trusts that do not offer Preneed record-keeping at the contract level, and in some cases the fees may even be less, as these trusts tend to use a buy/hold, long-term strategy, rather than a day-trading approach, which may run up transaction fees, significantly reducing earnings or resulting in losses.

The trust/trustee relationship is a vital part of any Preneed or Endowment Care Cemetery business and deserves careful consideration. Certificate Holders and Endowment Care Cemeteries should carefully evaluate their expenses to keep up with record-keeping and filing requirements, current trust costs compared with those charged by other trust/trustees, etc. You are encouraged to shop around and compare trust statements and assistance to your Preneed business, currently received, with what is available in the market. Due to the necessity of new trust documents, now is the perfect time to evaluate your trust/trustee relationships, especially if you are not happy with the fees charged to your trust or do not feel adequate services are provided for the amount of fees charged. The Board strongly encourages you to shop and compare available trust/trustees before choosing the trust/trustee best suited to meet the needs of your business.

We have revised our sample trust agreements to comply with changes in the law and regulations. These samples are for informational purposes only and do not replace the advice of an attorney. Use of the sample trust documents is not a substitute for the advice of an attorney. The Board of Insurance cannot provide legal advice nor make any representation that the sample trust agreements are correct, complete or up-to-date. The Department of Insurance is not responsible for any loss, injury, claim, liability, or damage related to your use of these sample trust agreements.