Frequently asked questions
Is there more than one type of pre-need agreement?
Yes. Guaranteed contracts mean that the cost of individual items or the cost of the total package will never be more to your family or estate. Non-guaranteed means just the opposite. (See the section entitled "General Funding Information" on guaranteed and non-guaranteed costs.)
Contracts may be funded by insurance/annuity policies, trusts, transfer of real estate/personal property.
What are my protections?
You should take your completed pre-need contract home before you sign it and review it with your family or your legal advisor. You have a right to this review before you sign the contract or pay any money.
YOU SHOULD ALSO READ CAREFULLY THE INFORMATION IN THIS DISCLOSURE STATEMENT. If you have any questions, contact the seller for more information or contact your legal advisor.
Can I cancel my pre-need agreement if I change my mind? Will I get my money back?
You may cancel payment for supplies or services within 30 days after signing the agreement. If you funded your pre-need arrangement through a trust, the contract seller will refund all the money you have paid plus any interest or income you have earned.
If you funded your pre-need arrangement through a revocable trust and you cancel the pre-need contract AFTER the 30 day deadline, you will be refunded all of your money on the items that are not guaranteed and 90% of all your money on the items that are guaranteed. You will also receive any interest or income on that amount. A revocable trust is a trust that you can cancel. NOT ALL TRUST PROGRAMS OFFER A REVOCABLE TRUST.
There may be a penalty to withdraw money from a revocable trust account which has already been established in your name. If there is, your contract will give you this information. (See the first question under the section entitled "Payment" below.)
If you have funded your pre-need arrangement through an irrevocable trust, you will not be able to cancel the trust agreement or receive a refund. An irrevocable trust is one that cannot be cancelled. If you funded your pre-need arrangement through an insurance policy/annuity contract which will be used at the time of your death to purchase the supplies and services you have selected, you will need to pay careful attention to the cancellation terms and conditions of the policy. You may not be eligible for a refund.
What happens to my money after the contract is signed?
Your money will be handled in one of several ways. It may be deposited in a separate trust account in your name. The trust account will list a trustee who will be responsible for handling your account. The funeral home you have selected as your beneficiary will also be listed. You have the right to change the funeral home and the trustee of your account prior to receiving the supplies and services under the pre-need contract.
Your money may be used to purchase a pre-need life insurance policy which may be used to pay for your arrangements upon your death. The proceeds of the policy will be assigned to the funeral home of your choice. You may change the funeral home assignment at any time prior to receiving the supplies and services under the pre-need contract.
You may decide to choose a life insurance policy or a trust account that requires regular premium payments and not have to make an up-front, lump sum payment.
May I pay for goods and services with real estate or personal property?
Yes. When you pay for these supplies and services in whole or in part with any real estate you may own, the pre-need contract that you sign will be attached to the deed on the real estate and the deed will be recorded in the clerk's office of the circuit court in the city or county where the real estate is located.
If you pay for goods and services with personal property other than cash or real estate, the contract seller will declare in writing that the property will be placed in a trust until the time of your death and will give you written information on all the terms, conditions, and considerations surrounding the trust. The contract seller will confirm in writing that he has received property.
You may decide not to transfer the title of the personal property to the contract seller of your pre-need contract. In this situation, you will have to submit information to the contract seller in writing that you are giving him the property without a title, and describe the property and where it will be kept until the time of your death.
In either case, the written statements will be recorded in the clerk's office of the circuit court of the city or county in which you live. The written statement does not have to be a separate document. REAL ESTATE OR PERSONAL PROPERTY CANNOT BE USED TO FUND AN INSURANCE POLICY, ANNUITY OR TRUST ACCOUNT.
General Funding Information
If the prices of the goods and services are affected by inflation between now and my death, will the funding I choose be adjusted accordingly?
There is a possibility that the funding may fail to keep up with inflation. This could mean that the funding you choose could have insufficient value to cover all expenses.
What happens if my funding is not enough to cover the full cost of these arrangements?
If the entire funeral or specific items in the agreement are guaranteed by the contract seller, your family or estate will not have to pay any more for those items provided that you have paid the grand total in full and all interest earned is allowed to accumulate in your account. However, if you have not paid the account in full and have not allowed the interest to accumulate in the account and any items increase in price, your family or estate would be responsible for the extra amount if the funds are not sufficient. In some situations where you pay toward your funding with regular premiums rather than in one lump sum, your account may not be enough at the time of your death to cover everything.
What happens to the extra money if my funding is more than what is needed to pay for these arrangements?
Sometimes, as explained in the answer above, your funding account may not have had the time to grow sufficiently before your death to cover items which are guaranteed in price to you, yet have increased in price for the funeral home.
After funeral expenses are paid, there may be money left over. Because of the on-going risk that a funeral home takes in guaranteeing prices for you, the funeral home may not be required to return this excess money.
Some funding agreements and funeral homes, however, require that extra money be returned to the estate or family. Others do not. You should obtain information concerning this in writing before signing the pre-need contract.
The answers to the following questions will depend upon the terms and conditions of the individual's funding and pre-need agreements.
Please review your pre-need contract and/or funding agreement for answers to these questions.
What happens to my pre-need contract if I change my assignment from one funeral home to another?
You must notify the Trustee in writing that you have changed your designated funeral service provider. If your contract is guaranteed by your original funeral home, that guarantee is not automatically transferred to the next.
What happens to my pre-need contract if I change the beneficiary of my funding or the use of my proceeds from the funding?
If you make such changes, it could void your contract. You should request specific information from the contract seller and the funding arrangement.
What will happen to my pre-need contract if I fail to make agreed premium payments to my funding source?
If you are making premium payments to an insurance company, your policy will expire. If you are making payments into a trust account, the amount you have paid may remain in that account earning income, but your service will not be prepaid or guaranteed.
Do I get any money back if I surrender or cancel my funding arrangements?
If your money is invested in insurance it will vary by insurance company. If you invest in an irrevocable trust your payments will remain in the trust earning income.
What is meant by guaranteed and nonguaranteed prices?
Some contract sellers may agree that certain prices are guaranteed. Some may guarantee the price of the total package. Other funeral homes may not guarantee any prices.
Guaranteed prices are those that will not increase for your family or estate at the time of your death. Basically, this means that your funeral arrangement for those items will be covered by and will not exceed your funding and the interest it earns. Nonguaranteed prices are those which might increase or decrease. The nonguaranteed prices may be written in at the time of this contract with your understanding that the price is an estimate only and may increase or decrease. A settlement to that effect may have to be made with your family or representative after your death.
If my money goes into a trust account, what information will I receive about that account?
If you want your money to go into a trust fund, the trust agreement must furnish you with information about the amount to be deposited into the account, the name of the trustee, information about what happens to the interest your trust account will earn, and information about your responsibility to file and pay taxes on that interest.
If there are filing expenses connected with your trust account, you will be notified what the expenses are and whether you or the contract seller is the responsible party for paying those.
What happens to the interest earned by the trust?
The interest earned by the trust may be handled in different ways by different trust arrangements. The interest may have to go back into your account if items on your contract are guaranteed. You may be responsible for reporting that interest to the Internal Revenue Service and paying taxes on it. You will be responsible to pay any taxes on the interest earned even if you cancel your trust account.
Some trust accounts cannot be canceled.
There may be special fees deducted from your interest. However, you may still be responsible for paying taxes on the entire amount of interest earned before the fees were deducted. Please ask your contract seller for a written list of any fees so you will have a clear understanding about them before you sign the contract.
If I pay my trust in premium payments, what happens if I die before the grand total of the funeral has been placed in trust?
Only if the contract is guaranteed by the Funeral Director.
Claims Against This Contract
Can someone to whom I owe money make a claim against the money, personal property, or real estate that I have used to pay for this contract?
No. This money or property cannot be used to settle a debt, a bankruptcy, or resolve a claim. These funds cannot be garnished.
Can the money or property be taxed?
No. Currently, interest earned on the money you deposit in a trust, savings account, or the value of the property you used for payment can be taxed but not the original amount which you invested. Interest earned on annuities is generally deferred until withdrawal. SOME TRUST ACCOUNTS PAY THEIR OWN TAXES AND YOU HAVE NO FURTHER TAX PAYING RESPONSIBILITIES.
General Goods and Services
If I choose goods and services that might not be available at the time of my death, what is the provider required to do?
The funeral home which you select is required to furnish supplies and services that are similar in style and equal in value and quality if what you choose is no longer made or is not available at the time of your death.
Your representative or next-of-kin will have the right to choose the supplies or services to be substituted. However, if the substitute is more expensive than the item originally selected by you, your designee or next-of-kin would be responsible for paying the difference. Under no circumstances will the funeral establishement be allowed to substitute lesser goods and services than the ones you chose.
If, before your death, the funeral home goes out of business or is otherwise unable to fulfill their obligation to you under the pre-need contract, you have the right to use the proceeds at the funeral home of your choice.
If the inability to provide services does not become apparent until the time of your death, the individual that you named as your designee could use the funds for services at another funeral home.
May I choose the exact item I want now and have the funeral home store it until my death?
If the funeral home or supplier has a storage policy you may ask for this service. If the funeral home or contract seller agrees to store these items, the risk of loss or damage shall be upon the funeral home during the storage period.
For example, what would happen if you select a casket which is in-stock at the time you make these arrangements and the funeral home or supplier agrees to store it for you in their warehouse and: (i) damage occurs, (ii) the funeral home or supplier goes out of business (iii) the funeral home or supplier is sold, etc.? You need to be assured in writing of protection in these types of situations.
What happens if I choose to have a unique service that is not customary or routine in my community? Must the funeral home comply with my wishes?
The funeral home which you have chosen to conduct your service may be able to only provide certain types of services. They may not be able to fulfill your request. If there is a restriction on what they can provide, you will be notified in writing before you sign the pre-need contract.
If the funeral home agrees in writing before you sign the contract to perform such services, the funeral home shall provide you with a written, itemized statement of fees which you will be charged.
Will the funeral home agree to transport my body to another area for burial?
Again, the funeral home may have restrictions on the distance they are willing to travel to conduct a burial. If restrictions apply, you will be notified in writing.
If the funeral home agrees in writing before you sign the contract to honor your wishes, the funeral home shall provide you a written, itemized statement of penalties (fees) which you will be charged.
I may die and be buried in a city other than the one where the funeral home that I select for my goods and services is located. Will the funeral home I select under this contract deliver my merchandise to the city where I die and am to be buried?
This is entirely up to the funeral home to decide. If the funeral home has restrictions on this, they will notify you in writing. If they agree to ship merchandise to another area for your funeral, you will be notified before signing this contract of the fees involved if they can be determined and guaranteed at this time.
However, the pre-need contract arrangements and funding is considered portable. This means that they are available for transfer from one locality to another. It is unusual for actual goods and merchandise to be transferred.
How will I know that the prices of items which I select are the same for everyone?
The funeral home maintains a general price list and a casket and outer burial container price list. Your contract seller will give this to you before you begin talking about arrangements. After your discussion is finished, you will be given a copy of your pre-need contract on which charges will be listed. Charges will only be made for the items you select. If there are any legal or other requirements that mandate that you must buy any items that you did not specifically ask for, the contract seller will explain the reason for the charges for you in writing.
You may ask a funeral home to purchase certain items or make special arrangements for you. If the funeral home charges you for these services, you will receive an explanation in writing. The charges to you for these services may be higher than if you or your family purchased them directly.
At the time of your death, your family or estate will be given an itemized statement which will list all of the specific charges. This is a requirement of the Federal Trade Commission. Although not required to do so, some funeral homes may also choose to give you an itemized statement when you make these arrangements.
Can the contract seller and I negotiate a projected charge for the non-guaranteed items based on the rate of inflation?
It is entirely up to the contract seller to inform you of the funeral home policy in that regard.
Caskets and Containers
Do I have to buy a vault or container to surround the casket in the grave?
In most areas of the county, state and local laws do not require that you buy a container to surround the casket in the grave. However, many cemeteries ask that you have such a container to support the earth above the grave. Either a burial vault or a grave liner will satisfy if such requirements exist.
Is a casket required?
A casket is not required for direct cremation. If you want to arrange a direct cremation, you may use an unfinished wood box or an alternative container made of heavy cardboard or composition materials. You may choose a canvas pouch.
Do certain cemeteries and crematoriums have special requirements?
Particular cemeteries and crematoriums may have policies requiring that certain goods and services be purchased. If you decide not to purchase goods and services required by a particular cemetery or crematorium, you have the right to select another location that has no such policy.
Is embalming always required?
Except in certain special cases, embalming is not required by law. Embalming may be necessary, however, if you select certain funeral arrangements such as viewing or visitation with an open casket. You do not have to pay for embalming you did not approve if you select arrangements such as a direct cremation or immediate burial. If the funeral home must charge to conduct an embalming, your designee will be notified of the reasons in writing.
This is all very confusing to me. May I pick someone close to me to help with all of this? May this person also work with the funeral home to ensure that my wishes as written in the pre-need contract are carried out?
You may designate in writing a person of your choice to work with the funeral home and contract seller either before or after your death to ensure that your wishes are fulfilled. You must sign the statement and have it notarized. The person that you designate must agree to this in writing. Under the laws governing pre-need contracts, the individual whom you designate has final authority at the time of your death.
Where can I complain if I have a problem concerning my pre-need contract, the contract seller, or the funeral home?
You may direct your complaints or concerns to:
The Virginia Board of Funeral Home Directors and Embalmers
Department of Health Professions
6606 W. Broad Street, 4th Floor
Richmond, Virginia 23230-1717
Telephone: (804) 662-9907
Fax: (804) 662-9943
Or call toll free: 1-800-533-1560