What is a pre-paid funeral contract?

With a pre-paid funeral contract, you can take care of your funeral expenses and make decisions regarding how you want your funeral to be handled. Some contracts work like an insurance policy; you pay installments until your death, and you get the services no matter how much you pay. Other contracts require you to pay either a lump sum or a total amount before you are entitled to the burial goods and services. Before you sign a contract, carefully read the document and be aware of its provisions. 

In the past, senior citizens have been victimized by fraudulent pre-paid funeral contracts. If not regulated, the seller of the contract could easily spend your money leaving no money for your funeral services when you need it. 

West Virginia regulates pre-paid funeral contracts by law. A person selling funeral services must be licensed and have a certificate from the state authorizing her to sell pre-paid funeral contracts. In addition, sellers of pre-paid funeral contracts cannot solicit customers at hospitals, nursing homes or rest homes, nor can they solicit relatives of persons whose death is pending.  

Your contract must be protected by an insurance policy or a trust fund. In a trust fund situation, the seller deposits your money in a trust. The trust is managed by a trustee. The trustee must be impartial and protect your money. Of course, it will cost money for the trustee to manage the trust. The law allows the seller of the pre-paid funeral contract to use 10% of your money to pay the trustee and other costs. 

When the trustee or insurance company receives a copy of your death certificate, and is satisfied that the funeral services have been performed, he or she pays the seller of the contract. If the funeral home does not provide the services, the money must be returned to the estate of the deceased within 10 days.  

If you want to cancel a pre-paid funeral contract before your death, you may do so. You have to notify the seller in writing. The seller must then notify the trustee within 10 days. The trustee must return your money within 30 days. 

When you buy a pre-paid funeral contract, make sure that your contract is filed with the Attorney General’s office. When you file your contract, you will have to pay a recording fee that goes into a fund called the Preneed Guarantee Fund. The fund reimburses people who lose money in a pre-paid funeral contract. The fund is used only for trust fund contracts. The insurance commission handles contracts that are protected by an insurance policy. 

If a seller violates a law in this area, criminal charges may be filed against him or her. If you think that a funeral home has committed a violation, contact the Consumer Protection Hotline in the Attorney General’s Office at 1 (800) 368-8808.  

For more information, see: W. Va. Code §§ 47-14-1 to -14 (2015); National Funeral Services, Inc. v. Rockefeller, 870 F.2d 136 (4th Cir.), cert. denied, 493 U.S. 966, 110 S.Ct. 409, 107 L.Ed.2d 374 (1989).