The business of death can be a tricky one. Most people do not like to discuss this often taboo subject, and many people are caught off guard when a loved one passes on and they are left grappling with their grief while trying to plan a funeral or other service with a cloudy thought process.
One facet of business for many funeral homes is the sale of preneed funeral services. Because this is an industry that is often fraught with the unsavory among the good, the North Carolina Legislature has chosen to regulate the state’s preneed funeral industry. The purpose of this state regulation is to protect the health, welfare, and safety of all North Carolinians through the North Carolina Board of Funeral Services.
What Is a Preneed Funeral Contract?
The state of North Carolina defines a preneed funeral contract as any contract “which has for a purpose the furnishing or performance of funeral services, or the furnishing or performance of funeral services, or the furnishing or delivery of personal property, merchandise, or services of any nature in connection with the final disposition of a dead human body, to be furnished or delivered at a time determinable by the death of the person whose body is to be disposed of, but does not mean the furnishing of a cemetery lot, crypt, niche, or mausoleum.”
Differences in Death and Funeral Options
One of the biggest caveats of a funeral contract is the designation of a funeral home or establishment as beneficiary. If the purchaser of the preneed contract does not specify a particular funeral establishment as beneficiary, the purchaser does not, in fact, have a preneed contract; the consumer probably has a life insurance policy, otherwise known as a final expense policy or burial policy, among other names.
The important thing for all consumers to understand is the fact that money from these life insurance policies—burial policies, if you will—are not necessarily going to go to burial expenses. The beneficiaries of such policies have the right to decide what funds go where. The beneficiary may choose to use the funds for burial or for a trip to the Bahamas.
In the state of North Carolina, you must be licensed to sell preneed contracts. Funeral establishments must be licensed to sell, and the individuals selling must also be licensed. An individual licensee must be affiliated with a funeral establishment, and each preneed license is only valid for one establishment.
Each licensed preneed establishment or person must fully comply with every requirement set out in Article 13D that includes proper documentation of all preneed contracts and licensing documents.
As with any regulated process, the document trail required with preneed contracts is detailed and must be adequately followed to be compliant.
Just some of the necessary information and the documentation you need to stay compliant include the following:
- Standard preneed funeral contract: This contract applies insurance proceeds or trust funds to the purchase price of merchandise and funeral services at the time of death without protection of future price increases.
- Inflation-proof preneed funeral contract: This contract says that the licensee and the purchaser have an agreement for merchandise and funeral services without regard for any possible future price increase.
- Written disclosure for inflation-proof funds transfer: This written disclosure allows the licensee to have all of the contract trust funds on deposit, as well as all proceeds from insurance policies. This transfer takes place even if the funds exceed the dollar amount of services and goods provided when the services are rendered.
- Substitution of licensee: If a contract is irrevocable, then the purchaser or funeral entity—upon written notice—may substitute funeral homes to carry out the services.
- Amendment of preneed funeral contract: Both parties—upon written notice and mutual agreement—can amend the contract.
- Contract fulfillment documents: When a funeral licensee completes the services, the following documents must be completed:
- Complete and submit a certificate of performance
- Distribute and document the funds associated with the contract trust
DMS Solutions for Preneed Licensees
All providers and licensees of preneed contracts within the state of North Carolina know and understand the importance of meticulous documentation in order to stay compliant and licensed. Keeping the documents up-to-date and ordered is a monumental task, especially for those who have a broad client base.
With DMS (document management software) from eFileCabinet, all of the worries and headaches associated with the necessary paper trail go away. They go away because all necessary documents are input into the DMS and preset to specific parameters and workflow patterns. For example, when you pull a contract and input certain information, you will be prompted to document, fill out, or otherwise transfer the other necessary documents to stay compliant. The responsibility to remember and do things in a timely manner is taken care of for you.
You can also rest assured because all transfer of documents is done in a safe and secure manner to ensure client confidentiality.
Fill out the contact form and let eFileCabinet show you what we can do to help keep your state preneed contract compliance in perfect order.