The Late Trust Deposit
On March 3, a Missouri-licensed preneed seller at a St. Louis funeral home writes a preneed contract for $9,400. The purchaser pays $2,500 down and signs an installment note for the balance. The seller deposits $1,800 into the preneed trust on April 10, retains $700 as an 'administrative fee' that is not mentioned in the contract, and uses $250 from the trust account to pay a limousine lease. The bookkeeper records the $250 as a 'temporary loan.' On May 1, the purchaser asks for a copy of the trust deposit receipt; the seller says trust records are 'confidential.' The seller's preneed license is current. The Board's preneed rules require accurate records and prohibit commingling.
1. Identify each violation with the relevant deadline or rule, and calculate the deposit deadline for the $2,500 down payment.
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Deposit deadline. The down payment was received March 3. Chapter 436 requires preneed funds to be deposited into the preneed trust or joint account within 30 days after receipt. March 3 plus 30 days is April 2 (March has 31 days), so the April 10 deposit was eight days late. Retention. A seller may retain only the amount permitted by Chapter 436 and the contract. The $700 'administrative fee' is not in the contract, so it cannot be withheld; the seller must deposit it. Commingling. The $250 transfer to pay a limousine lease is a prohibited use of trust funds, even if recorded as a 'temporary loan.' Trust money is not the seller's operating capital. The seller must restore the $250 plus interest. Records. The purchaser is entitled to information about the contract and trust; a blanket claim of confidentiality is not a defense to the Board's examination. The installment payments must also be deposited within 30 days of receipt. Each failure can support separate Board counts.
2. What must the seller do to cure the deficiencies, and what are the consequences if it does not?
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Cure. The seller should immediately deposit the $700 retention and restore the $250 plus interest to the trust, correct the books, and prepare a reconciliation from the date of receipt. It should give the purchaser a written statement showing the amount paid, the amount deposited, and the trust balance, and provide a copy of the contract. It should self-report the late deposit and the transfer to the Board and cooperate with an audit. If it does not. The Board can suspend or revoke the preneed seller license, impose fines, require an independent audit, and refer for criminal prosecution if the transfer is treated as conversion. The purchaser can sue for an accounting and damages. The funeral home should also review other contracts for the same practice, because a single late deposit often signals a systemic problem.