State advises caution in making final arrangements
It is not the most comfortable subject to discuss: End-of-life arrangements.
Yet for National Consumer Protection Week, the Michigan Department of Licensing and Regulatory Affairs has decided to focus on the potential pitfalls of making funeral plans in advance.
The trend is to prepay for funerals. But that means those doing such arrangements, and their families, need to be aware of their rights in entering such contracts, so they aren’t later taken advantage of in a vulnerable time.
LARA’s Corporations, Securities and Commercial Licensing bureau oversees funeral homes and morticians.
“Prepaying for a funeral is a large financial commitment and a big decision that shouldn’t be made under pressure or on the spur of the moment,” CSCL Director Julia Dale said. “Do your research. Know who you’re doing business with, what you’re buying, and what happens to your money if you prepay funeral expenses and if you can cancel the contract. Discuss it with your family.”
Michigan’s Prepaid Funeral and Cemetery Sales Act requires sellers of prearranged funeral and cemetery goods and services to be registered with the state. Funeral directors in Michigan are required to be tested, inspected and licensed by the state. Pre-need sellers are separately registered, and their records are audited by the state on a routine basis. Some also hold insurance registrations and sell insurance policies that cover pre-need goods and services.
LARA offers these tips to make an informed decision on a prepaid contract for funeral and cemetery services before signing or paying for anything:
— Know the business owner — a funeral director, a cemetery salesperson or a commissioned pre-need seller. Are they reputable?
— Always verify with CSCL the seller of funeral or cemetery goods and services is registered and licensed with the state. Check the license status of any funeral home at www.mi.gov/licenselookup.
— Know what you are paying for — a casket and vault only, and/or funeral services.
— Know if the prepaid contract you are considering is either guaranteed or non-guaranteed. A guaranteed contract ensures there will be no future additional costs charged for goods and services contained in the contract. However, any excess funds in escrow that are not used will not be refunded. A non-guaranteed contract provides that additional future costs may be charged to provide for the goods and services contained in the contract. Any excess monies in escrow, which were not needed to provide the contract’s items, will be refunded.
— Shop and compare prices offered by several funeral providers and cemeteries.
— Know what happens to the prepaid money and know what happens to the interest on that money.
— Know in advance who the escrow agent will be before purchasing a prepaid contract. All funds received in a prepaid contract must be held in escrow by an escrow agent for the contract beneficiary.
— Know cancellation rights — if a full refund will be given if the contract is cancelled or if a penalty is involved and how much that penalty might be.
— Is the prepaid contract transferable if the funeral home or cemetery goes out of business or if the person moves or die while away from home?
— Read the prepaid contract carefully and have a clear understanding of it before you sign it.
— Get a copy of the signed prepaid contract. This is the only document that lists exactly what has been purchased.
— Get confirmation from the escrow agent that prepaid contract funds were deposited within the required 30-day timeframe. This is not required when a non-guaranteed contract is purchased and the seller elects to be the escrow agent.
— Make sure a yearly statement is received from the escrow agent/financial institution holding the funds.
— Inform your family or designee that you’ve purchased a prepaid contract for your funeral or cemetery arrangements and where the documents are filed.
Monthly disciplinary action reports can be reviewed at www.mi.gov/cscl; click on “Complaints,” “Disciplinary Action Reports,” and then on “Licensing Reports.”