The 80 Percent Trust

The seller must fund the trust at the percentage required by Louisiana's preneed statute and the Board's rules for the merchandise and services covered. A 20 percent retention for administrative and marketing costs is not permissible merely because the contract recites it; the seller must point to a specific statutory or rule-based authorization for any amount not deposited. If the required deposit is 100 percent of the amount paid for trust-funded items, the $1,900 shortfall must be cured with interest and an accounting. The trust account is also improperly commingled: it contains operating cash and another family's refundable deposit. Preneed trust funds must be segregated and used only for the purposes allowed by law. The seller should immediately remove operating funds, identify each beneficiary's share, restore any shortfall, and obtain an independent accounting. Commingling creates a fiduciary breach and supports suspension or revocation.

An insurance-funded preneed contract is still a regulated preneed contract, even though the funding mechanism is a life insurance policy rather than a trust. The seller must be properly registered and must use the required contract and disclosure forms. The buyer must receive a clear explanation that the funeral provider will be paid from the policy proceeds, that the policy is assigned or beneficiary-designated as required, and that the buyer has cancellation and refund rights. The statement that no trust is needed because the policy covers it is incomplete and potentially misleading; it omits the assignment, disclosure, and registration requirements. The seller should not treat insurance-funded sales as outside Board oversight. The Board and the Department of Insurance may both have roles, so the seller should maintain the policy documents, assignment, disclosure acknowledgments, and annual reporting in the contract file.

The seller is missing the annual trust report due March 1, a beneficiary-level trust ledger, documentation of the required deposit, and a reconciliation showing why $1,900 was retained. It also needs the insurance-funded contract file with the policy, assignment, disclosures, and acknowledgment. The auditor should receive the requested contract, trust statements, and registration without delay. Late or missing annual reports prevent the Board from verifying solvency and consumer protection. Enforcement can include a fine, a cease-and-desist order on new preneed sales, suspension or revocation of the seller registration, a required audit, restitution to the buyer, and referral for fiduciary misconduct. The seller should file the missing report immediately, cure the trust shortfall, segregate the account, and adopt written procedures for deposits, withdrawals, and annual reconciliation.