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Are There Consumer Protections for Those Who Enter into Preneed Funeral Plans?
The laws around preneed agreements are written by the states and vary widely from state to state. Thus, legal protections vary a great deal as well. There are no minimum […]
The laws around preneed agreements are written by the states and vary widely from state to state. Thus, legal protections vary a great deal as well. There are no minimum federal standards as to what a preneed contract should include, and the federal government does not require full disclosure of preneed contract terms, explains AARP. These issues may be addressed when the Federal Trade Commission updates its funeral guidance, which many stakeholders hope happens soon. The agency began reviewing the Funeral Rule in early 2020 and requested comments from interested parties, including service providers, consumers and advocacy groups, at that time. The comment period is over as of this writing, but no new rules have been issued as yet.
On a state level, a few states have established “recovery funds” to compensate consumers who are defrauded by a funeral home. These states require that sellers of preneed services pay a per-agreement fee, which is based on the value of the contract. The state deposits the fees in the recovery fund and uses it to defray the consumer’s loss if a seller reneges on the contract and is unable to provide a refund (for example, if the funeral home is in bankruptcy). Sadly, these recovery funds are not the norm.
Additionally, some states specify that a funeral service provider must provide a refund of some portion of the money paid if the consumer cancels, regardless of the reason why. In Ohio, for example, the funeral home must provide the following:
- A seven-day “cooling off” period during which the consumer can cancel the contract and receive a 100% refund
- A 90% refund of money paid on a preneed funeral services contract if the consumer changes their mind after seven days
- A 60% refund of the amount paid for a cemetery contract
- 80% of the interest earned on either a preneed cemetery contract or funeral service contract
But, again, each state has its own laws, and most states offer little protection at all.
Sources
“The Ultimate Guide to Estate Planning”. AARP. https://www.aarp.org/money/retirement/the-ultimate-guide-to-estate-planning/
“Pre-Need Funeral Contracts”. Elder Law Answers. https://attorney.elderlawanswers.com/pre-need-funeral-contracts-3337
