Preneed Funeral Contracts, Trusts, and Consumer Funds
What is a preneed contract
A preneed funeral contract is an agreement to provide funeral services or merchandise before death. Oregon regulates sellers, requires written contracts with specific disclosures, and restricts how funds are held. A preneed seller must be a licensed funeral establishment or cemetery, or otherwise authorized.
Trust funding
If the contract is funded by trust, the seller must deposit at least 90 percent of the purchase price into a trust account with a qualified trustee within the time set by rule. The seller may retain a limited amount for sales and administration. Trust funds may not be commingled with the seller’s operating funds. The trustee must provide accounting, and the seller must file periodic reports with the board.
Insurance funding
If funded by insurance, the seller must ensure the policy is assigned or the beneficiary is properly designated and must disclose that the contract is insurance-funded. The purchaser must receive a copy of the contract and cancellation rights.
Cancellation and refunds
Oregon gives purchasers cancellation rights. On timely cancellation, the purchaser is entitled to a refund of the amount required by statute and rule, less any permitted retention. If the seller fails to fund the trust, the board may discipline and the purchaser may have a civil claim.
Worked example
A family pays $8,000 for a preneed package. The seller must deposit at least $7,200 into trust, retaining no more than $800 for permitted costs. If the seller deposits only $4,000 and uses the rest for payroll, that is a trust violation and unprofessional conduct, even if the family never complains.
Traps
Do not assume the entire contract price goes to trust. Do not treat a preneed contract as a current-need funeral. Do not ignore annual reporting; missing reports alone can trigger discipline.