Category: Consumers

Choosing a funeral director was simple in our grandparents’ day when there was usually just one funeral home in town.

In fact, it is not at all uncommon that a local funeral homeowner – or their relatives – have provided their important services to families in your community for the last several years and even generations.

Today, with our mobile society and family members living all over the country, along with many funeral service options available, selecting a funeral director may take some careful thought and planning.

However, choosing a funeral director is like engaging any other professional such as a lawyer or doctor and doesn’t have to be – nor should it be – a daunting task.

If your family does not already have a local funeral director, consult with your pastor or rabbi for recommendations. You may also consider asking your friends and neighbors. Have you attended a funeral that particularly stood out to you? Visit their funeral home website to learn more about their services and staff.

If you’re not familiar with the funeral homes in your area, you may wish to make an appointment to visit one or more of them. In this way, you can meet with the funeral director, tour their facilities, learn about the different options available to ensure you have a clear understanding of the costs for services and merchandise you may desire.

Find a NYSFDA member funeral homes in your area.

At PrePlan, your privacy is important to us. While obtaining necessary information is the cornerstone of our ability to offer excellent services, PrePlan recognizes that our most important asset is our customers’ trust. We are particularly concerned about the privacy of each individual customer who obtains financial products and services from us for prefunded funeral prearrangement purposes. This brochure provides you with our privacy policies and practices with respect to the disclosure of nonpublic information about you. For purposes of this Privacy Policy, the term “we” or “us” refers to the PrePlan Trust, New York State Funeral Directors Association, Funeral Director Support Services, Inc., and their officers, directors, trustees, and employees.

Information We May Collect:

In providing you with financial products or services, we may collect nonpublic personal information about you from the following sources:

• Information we receive from you on preneed agreements, preneed itemization statements, subsequent information change requests, and other forms and correspondence necessary to maintain your preneed account with the PrePlan Trust program.
• Information about your transactions with us, our affiliates, and/or others.

Information We May Disclose and to Whom We May Disclose the Information:

We may disclose nonpublic personal information about you to our affiliates. These affiliates include the funeral home with whom you have established funeral prearrangements, state and federal tax agencies, and other members of our corporate family. We may disclose to our affiliates all of the categories of information we collect as described above. Except as stated herein, no information will be disclosed to nonaffiliated third parties. It is important to remember that we have no financial interest or ownership in any funeral home with which you may do business.

Our Security Practices:

We restrict access to nonpublic personal information about you to employees of the New York State Funeral Directors Association, employees of Funeral Director Support Services, Inc., document storage vendors, employees of the funeral firm with whom you have made funeral prearangements, and employees of state and federal tax agencies. Employees of the New York State Funeral Directors Association and Funeral Director Support Services, Inc., are trained in the importance of maintaining confidentiality and customer privacy. We maintain physical, electronic and procedural safeguards that comply with federal regulations and leading industry practices to safeguard your nonpublic personal information.

Former Customer:

Even if you are no longer a PrePlan customer, our Privacy Policy will continue to apply to you with respect to any nonpublic personal information which we may have in our possession. This Privacy Policy applies to nonpublic personal information about individuals who obtain financial products or services primarily for personal, family or household purposes. We reserve the right to change this Privacy Policy and any of the policies described above at any time. The examples contained within this Privacy Policy are illustrations only; they are not intended to be exclusive.

• Nonpublic personal information means personally identifiable financial information that is not publicly available.

How can I be sure the funds in my PrePlan account are safe and will be there when they are needed?

Consumers in New York who prepay their funeral expenses enjoy the full benefit of having their funds protected by the strongest preneed laws in the nation. These laws require that 100% of your preneed funds be deposited into an interest-bearing, government backed trust account.

Preplan also voluntarily submits the trust fund to an annual audit to ensure the transparency and accuracy of our reporting.

In addition, PrePlan works on behalf of its member funeral homes and their consumers by investing solely in certificates of deposit with a diversified group of highly-rated banks. Each accountholder in PrePlan is federally insured.

Following are some commonly asked questions and answers specific to your PrePlan trust account. If you have any additional questions, please contact the funeral home with which you set up your account.

Who actually owns the funds in a preneed account?

Until the funeral home has provided the merchandise and services, the purchaser whose funds were used to open the account remains in control of the account and can change arrangements and/or their choice of funeral home at any time. If the account is “revocable,” a purchaser may request a full refund of the principal and interest earned at any time, for any reason, without penalty.

My mother is applying for Medicaid; can she set aside funds by opening a preneed account to pay for her future funeral and burial expenses?

Yes, New York State allows an individual applying for Medicaid or Supplemental Security Income (SSI) to set aside funds in an “irrevocable” account for these very expenses. These funds are considered an “excludable asset,” meaning they are not counted as a resource when determining eligibility. However, any funds set aside in an irrevocable account may not, by law, be refunded to the purchaser. In addition, any overage in funds remaining in the account after expenses are paid must be sent to the appropriate department of the county where the beneficiary was living at the time of his/her death.

A Medicaid/SSI applicant also has the option of setting funds aside to pay the funeral/burial expenses of certain family members. Any account established for the benefit of a family member must, under New York State law, also be irrevocable, as any and all funds in such account would be an “excludable asset” as well.

If my account is “revocable” and there is a balance left after my funeral expenses have been paid, where does this overage go?

Any funds remaining in a revocable account must be remitted to the purchaser, if different from beneficiary, or to the estate of the beneficiary (decedent).

What happens if the funeral home I make arrangements with goes out of business?

The funeral home must, by law, inform each individual who has prefunded a funeral with them of this fact. They must also advise the consumer of their right to transfer their prearrangements to any other funeral home they choose, or, if revocable, receive a refund of their total deposited amount plus all interest earned.

I received my annual Grantor Trust Tax Information Statement from PrePlan; what amount do I report on my taxes for interest income?

It is the “Gross Taxable Interest” amount as printed on the trust tax statement that must be reported on your income tax return. For more tax information, including tax reporting terms.

What are the fiduciary and advisory fees disclosed in my preneed agreement for?

As with any trust in New York State, PrePlan is permitted by law to expend up to three quarters of one percent of the balance in the fund to provide the necessary services to operate and staff the trust. This is one of the lowest fees in the nation. In addition, a minimal advisory fee is also paid for the expert investment advice given to PrePlan for the direct benefit of its customers. These terms are fully disclosed in the preneed customer agreement provided to all customers.

Is PrePlan accredited by the Better Business Bureau?

Yes! PrePlan is proud to have earned an “A+ excellence rating” by the highly regarded Better Business Bureau (BBB). This designation was awarded following a successful review and BBB background check. With the strongest consumer laws in the nation and BBB accreditation. New York State consumers can be confident that their prepaid funeral funds are well protected with PrePlan.

Pleased be advised:

PrePlan cannot provide any tax statement information over the phone.

If you have moved, please be sure that the funeral home you have made prearrangements with has your current address.

Year-end tax statements will be mailed out between January 25 through the 31st of this year and will be available online after January 31st. To access this information please click on the “Consumer” tab above. You will need:

• The PrePlan account number
• Last four (4) digits of the Purchaser’s Social Security Number
• Purchaser’s last name

Once logged in, you may download and print copies of your Tax Statement(s) for the last three years.

If you have any questions, please contact the funeral home you have made your prearrangements with. They will be happy to assist you.

Tax Reporting Glossary

Beneficiary: The individual for whom funeral arrangements will eventually be performed.

Federal E.I.N: An Employer Identification Number is assigned to each account held in PrePlan and is used for reporting interest to the IRS.

Fiduciary Fees Paid: A minimal fee deducted from the gross interest amount to cover administration costs of the trust. This fee is fully disclosed in the PrePlan customer agreement.

Gross Taxable Interest: The total amount of interest earned on the trust account. This is the amount the consumer must report per the IRS.

Investment Advisory Fees Paid: A fee determined annually to pay for related professional investment advice. This fee is fully disclosed in the PrePlan customer agreement.

Net Interest Earned: The gross taxable interest earned less fiduciary and investment advisory fees paid; sum of all net interest figures on the summary statement.

Summary Statement: A statement generated annually summarizing all cash flow transactions on each account.

Taxpayer Social Security Number: The SS# of the individual responsible for reporting the interest earned on the trust account, as per the original trust agreement. This should always be the purchaser’s SS#.

Trust Tax Statement: The statement generated by PrePlan showing the gross interest income amount reported to the IRS.

Special Consideration for Medicaid/SSI Applicants & Recipients

All citizens – regardless of income – are entitled to and deserving of both a proper funeral service and a burial with dignity and respect. In fact, federal and state laws support this guiding principle in a number of ways.

First, any person applying for Medicaid/SSI can set aside funds for the sole purpose of paying their funeral/burial expenses – as well as the funeral/burial of immediate family members – as part of the spend-down process to Medicaid/SSI eligibility. The funeral/burial funds set aside will not be counted as part of the individual’s financial resources. A Medicaid/SSI eligible individual must first notify his or her caseworker that funds will be set aside to pay their funeral/burial tax expenses.

Second, New York State law requires that 100% of these funeral/burial funds be placed in an irrevocable trust account, ensuring they will be available when needed and used for no other purpose than what they were intended: for the funeral/burial of the account beneficiary.

An applicant/recipient of Medicaid/SSI may also set aside funds in irrevocable funeral trust accounts for the following immediate family members:

• Spouse
• Children
• Step-Children
• Siblings
• Parents
• and spouses of those individuals listed above

Please note that when the original purchaser passes away, the beneficiary (family member) becomes the new purchaser and taxpayer. If there is any excess money in the preneed account after the funeral and burial charges have been paid, the overage will go to the county where the decedent was receiving benefits.

The funds used to establish an irrevocable preneed funeral account must be used only for reasonable and common funeral expenses for such things as professional services, transportation, facilities and merchandise, as well as cash advances to cover the cemetery and other related charges.

Finally, the individual has the right to use any funeral home they choose, and may be changed at any time.

Commonly Asked Questions: Preneed Accounts for Applicants or Recipients of Medicaid/SSI

Q: What happens if I currently have a revocable preneed account, but I am now applying for Medicaid or SSI?

A: When applying for Medicaid/SSI, your caseworker should advise you that the revocable preneed account must be converted to an irrevocable account to ensure that your eligibility for benefits is not jeopardized.

Q: How does my life insurance policy affect my Medicaid eligibility?

A: The face value of any life insurance policy(ies) over $1,500 will be counted as an asset in determining your Medicaid eligibiity.

Q. Can an overage in an irrevocable preneed trust account be used to fund additional services or merchandise?

A: No, If the current account balance exceeds the actual cost of the services and merchandise originally selected, the overage must be returned to the county.

Q: Can my irrevocable preneed agreement be modified at the time of need?

A: Yes. However, the new items must be equal or lesser value, and must qualify as funeral merchandise and services. If there is an overage, the funds may not be depleted to cover additional merchandise and services, but instead must be returned to the county.

Q: Which county Social Services Department receives the overage in an irrevocable trust account?

A: If there’s an overage after the final funeral charges have been paid, the overage must be sent to the county where the recipient was receiving public assistance at their time of death.

Q: Can an irrevocable preneed funeral account be split into separate accounts in New York State?

A: No. The full amount of an irrevocable preneed agreement must be placed into a single preneed trust account.

Q: Which items may not be included on the preneed itemization form for an irrevocable preneed account?

A: As an applicant or recipient of Medicaid/SSI, you may only prearrange “reasonable and common” funeral merchandise and service expenses that are related to the funeral. Examples of items not permitted by NYS Department of Health include: airline tickets, funeral luncheons, charitable donations, and cash gifts. If there are any questionable items, you should speak to a social worker to obtain prior approval.

Q: Who may authorize a transfer of funds to another funeral home?

A: Before death occurs, only the purchaser and his/her legal representative may authorize a transfer of an irrevocable preneed account to another funeral home.

Q: How does the law affect pre-existing contracts of Medicaid applicants and recipients?

A: If you had both a pre-existing agreement and were receiving benefits prior to January 1, 1997, your account may remain revocable, but must still be recertified annually by County Social Services personnel.

Preplanning your memorial service is a loving gesture to those you leave behind.

Most importantly, planning ahead of time will relieve your family from having to guess what your wishes were during a very emotional time following your death.

Before visiting a funeral home to discuss your prearrangements, give some thought to your preferences for a celebration of your life.

Try to identify religious elements, songs or readings and personal touches you would like made part of your service.

When you meet with the funeral director, they will guide you through the different services and merchandise available so you can select those that match your personal preferences and beliefs.

Your funeral director will give you a printed copy of their “General Price List” to show the cost of services and merchandise.

This will enable you to create a meaningful service that meets your preferences and financial considerations.

Once the details have been finalized, your funeral director will prepare a preneed agreement and fully itemized statement for your review.

You’ll get a copy to take home with you.

Pre-payment is not required, but it is an easy and secure option should you choose to do so.

In New York State, your funeral director is required by law to deposit your prepaid funds into an interest-bearing government-backed trust account.

The principal – and the interest earned – will remain yours.

It is important to discuss your decision to pre-plan and/or pre-fund your funeral with your loved ones.

Discuss with them which funeral home you have made your arrangements with and consider providing them with a copy of your preneed documents.

There are several pieces of information you want to have handy when you sit down to plan your celebration of life.

Military history, education, life experiences and even your philosophy can all be elements of a meaningful memorial.

What to expect at a prearrangement conference:

NYS law requires the funeral director to provide you with the following:

• A General Price List with the current prices for any merchandise, services and facilities regularly offered by the funeral home.
• A Preneed Itemization Statement that lists the items of merchandise, services and facilities that have been chosen, and the price of each.
• A Preneed Agreement that outlines all the terms, as well as consumer’s rights. It must also state how the principal and interest will be applied to the cost of the funeral services and merchandise at the time they are provided.
• If prepaying, Written Notice provided within 30 days of payment to identify where the money has been deposited.

Security of Preneed Funds in the state of New York

New Yorkers, like all consumers, understandably want to be sure the funds they set aside in a preneed funeral trust account are safe and secure. The following is a series of fundamentally important questions about the protection of preneed funds.

How does New York State protect preneed funds?

Consumers in New York who prefund their funerals have their money protected by what are truly the strongest preneed laws in the nation.

These laws require that 100% of preneed funds be deposited in an interest-bearing, government backed trust account where the principal and interest earned remain the property of the consumer.

The purchaser remains in control of the preneed account. If the account is revocable, a purchaser may request a full refund of the principal and interest earned at any time, for any reason, without penalty.

The purchaser may also select a new funeral home at any time.

New York State law also mandates full disclosure to the consumer by requiring that written statements be sent containing information on the funds deposited to date, where they are deposited and the amount of interest earned.

Under New York State law, applicants or recipients of Medicaid or Supplemental Security Income (SSI) may set aside funds in an irrevocable trust account for the sole purpose of paying their funeral and burial expenses, and those of their family members.

The funds in an irrevocable funeral trust are exempt from being counted as a resource when determining eligibility. By law, funds in an irrevocable trust account cannot be refunded, but the purchaser may select a different funeral home at any time.

What is the difference between a revocable preneed account and an irrevocable preneed account?

In New York State, an individual applying for Medicaid or SSI may set aside funds in an “irrevocable” account for their – and their family members’ – future funeral/burial expenses.

These funds are considered an excludable asset in determining program eligibility.

Funds set aside in an irrevocable account may not be refunded and any funds remaining (“overage”) in the account after payment is made for all funeral services and merchandise provided must be forwarded to the county where the beneficiary was residing at the time of death.

In contrast, a revocable account in New York State is fully refundable upon demand. Any overage remaining in a revocable account after the funeral services and merchandise have been provided must be forwarded to the beneficiary’s estate.

Both irrevocable and revocable preneed accounts allow a change to a different funeral home, even if in another state, without penalty at any time.

May a funeral director charge a fee for planning a prepaid funeral?

No, in New York State, funeral directors cannot charge any fee for prearranging a funeral.

Are there any fees associated with planning a prepaid funeral?

Yes, all preneed funeral trusts, are permitted by law to assess a fee of (.0075%) of the principal sum in the fund to provide management and administrative services to operate and staff the fund. A minimal fee is also paid for the expert investment advice given to PrePlan for the benefit of its customers.

Of course, these terms are fully disclosed in the preneed agreements.

What happens if the funeral home closes?

In the event of a funeral home closing, NYS law requires that all account holders be notified in writing within 30 days.

Fortunately, preneed funds are forwarded to an interest-bearing account with a separate financial institution in the purchaser’s name. The purchaser remains in control of those funds at all times.

They may then choose to transfer the funds in their preneed account to another funeral home or, if it is a revocable agreement, they may request a refund of their deposits plus all interest earned.

The New York State Health Department Bureau of Funeral Directing regulates funeral service and may be of assistance.

What is the difference between pre-planning and pre-funding
a funeral?

Pre-planning a funeral involves making decisions on the service (music selection, readings, burial options, etc.). Many people think of funeral planning as part of their estate planning.

Pre-funding involves setting aside money to cover the costs of the funeral in the future. You can either pay the full amount or arrange a payment plan with the funeral home.

Many people often choose to both pre-plan and pre-fund their funeral when meeting with a funeral home.

Why Pre-plan a Funeral?

• Make personal and specific selections for the funeral service that most closely meets your preferences and reflect your life’s story.
• Prevent your loved ones from second-guessing your wishes after you die.
• Take the time to research funeral homes, burial options, and financial considerations.
• Consider the option to set aside funds for final expenses, relieving family members of an unexpected financial burden.

Learn more about Preplanning a funeral and what to expect.

Why Pre-fund a Funeral?

There are a number of benefits to pre-funding a funeral:

• Place the cost of the funeral (at today’s prices) in an investment vehicle that will earn interest to keep pace with inflation to cover the cost of the funeral (at future prices) when the death occurs.
• Prevent life insurance policies from being depleted at the time of death.
• Consider options at your own pace to make sound, fiscally-responsible decisions.
• Spare your loved ones the unexpected cost of a funeral during a highly emotional time.
• Medicaid/SSI recipients may set aside money to fund the funeral service of their choice as a part of the “spend-down” process to meet eligibility limits.

New York State has the strongest preneed trust laws in the nation. Learn more.

The Gold Standard. Our Promise to You.

For 35 years, PrePlan has partnered with New York State Funeral Directors Association (NYSFDA) member funeral homes to provide services designed for families across New York State. As the state’s leading pre-funded funeral trust administrator, we understand the needs and concerns of our consumers. When planning and funding your funeral arrangements, you want to be sure your funds are safe, secure, and compliant.

This is how PrePlan protects you and your assets:

• Funds are 100% government-backed and we consider each investment decision carefully
• Quarterly audits conducted by an independent firm ensures all investments are fully secure and compliant, checks and balances are in place, and all legal requirements are met
• Knowledgeable and experienced staff well-versed in New York State preneed law and Medicaid/SSI compliance issues
• Accredited by the Better Business Bureau, PrePlan proudly holds an A+ rating
• Backed by the New York State Funeral Directors Association, we have a deep understanding of the funeral and memorial planning process and our participating member firms adhere to an enforceable Code of Ethics

So when looking to open a preneed trust account for yourself or a loved one, be sure to ask your funeral director about PrePlan Funeral Trust.

Looking for a funeral home in your area? Click here to find a NYSFDA member firm.