First: January 4, 2014
Last: January 4, 2014
Since I have no relatives and don't want to impose on friends, I decided to purchase a preneed funeral. I had been satisfied with a local mortuary that had handled my mother's funeral in 2010. This mortuary had been specifically recommended by the local hospice care group. I decided to trust the mortuary for my preneed funeral about a year after my mother's funeral. I paid $5383 for the arrangments, which I think was fair for what I want
I also realized I was signing an irrevocable trust. I thought I was done with my funeral arrangements.
In Feb 2012, I received a "grantor letter" telling me what my trust had earned as far as interest, dividends, and capital gains and that my money was invested in a capital appreciation fund. There is evidently no legal obligation to inform the consumer of how the money is invested and no legal obligation to tell the holder of the trust how much money has accumulated. I was told by the representative of the funeral home I only had to pay on interest only. The amount was not great, so I claimed the interest and just to be sure, the dividends. The capital gains were negative.
The same thing happened in 2013, but the dividends and interest were quite a bit higher, although the capital gains were still negative. I was first told again by the mortuary to only claim interest. When I question this, the owner checked and called me and said I had to declare everything. I do not believe this was the first time he had been asked about this and only at the point realized I had been ill advised and duped.
I now know most people I know have a type of life insurance policy which carries no further tax liability. I was never informed that the contract I signed had any tax liability. My point of posting this is to caution everyone to be sure you ask about tax liability if you purchase a preneed funeral. The mortuary could have chosen a low volatility, tax exempt fund. The mortuary told me if I had been elderly, near death, or indigent, that's what they would have used. Since I was 66, I might live a long time and they could lose money. I understand mortuaries are not charities, but I feel the complete lack of disclosure was unethical, dishonest, and fraudulent.
I have filed with the Indiana Attorney General and the Indiana Funeral Directors Association. Interestingly, my irrevocable trust is run by a division of the Indiana Funeral Directors Association and has posted online a very cynical guide for mortuaries to know how complaints should be addressed. Sorry to have run on so long, but it is difficult to describe the whole situation concisely.
Be very careful!!!