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Portability and Missouri Preneed Law: Seller Expenses

A few weeks ago the Missouri Embalmers and Funeral Directors Association posted a YouTube video explaining their take on preneed portability under Missouri law.  The MFDEA frequently posts videos in response to industry queries, and for the association to spend 37 minutes on portability suggests that it is fielding numerous requests from MFT providers.  The video is full of double talk and misinformation that we will address in future posts.   However the video contains a glaring legal misstatement that must be corrected.

At minute 24.48 of the video, the MFDEA general counsel suggests that Chapter 436 allows a preneed seller to get a percentage of preneed trust income for their expenses, and when the seller has been taking that expense from the trust, those funds won’t be available for transfer to an alternate provider.   Excuse me, but Chapter 436 does not allow a preneed seller to recover expenses from preneed trust income.   Missouri preneed sellers may only look to the origination fee (5% of the contract purchase price) and the sales expense (10% of the sales price of guaranteed items) to offset the expense of a preneed contract.   Sellers cannot look to preneed trust income until the contract is serviced or canceled.  If preneed sellers were allowed to tap their trust income for company operating expenses, consumer trust accounts would see little if any growth.   We can’t help but wonder if this was an issue the State Board’s financial examiner had identified with the Missouri Funeral Trust, and which led to the MFDEA supporting the Division of Professional Registration when it sacked the Board and its staff last October.

When we pointed out prior misstatements in their YouTube videos, the association removed the video.  To retain the smoking gun, we have downloaded the MFDEA’s Portability video.   Here is the video in its entirety, but you may want to fast forward to minute 24:48 to hear the statement regarding seller expenses and trust income.  If the video disappears, contact us if you want a copy.

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