For the past 6 weeks, GFDA has been working to secure favorable legislation for GA funeral service in the face of some potentially dangerous proposals from interests outside the state. That outside interest sought to allow funeral homes to invest preneed escrow in the stock market and other riskier investment instruments. GFDA disagrees, along with Rep. Sims and others, and believes preneed escrow should remain in the secure FDIC-insured or Treasury-backed instruments required under current law.

HB 953 is attached. (If you print it, it must be on legal paper or it will cut off some of the language).

We ask that you call your state representative and state senator to support this legislation drafted by Rep. Chuck Sims. In this extensive effort, GFDA worked with Rep. Chuck Sims, the legislative committee of the State Board, other state organizations, funeral associations across the country and NFDA. Thanks to all of these for their hard work, information and suggestions.

Other states that allow funeral homes to make this type of investment have had dire consequences; in all instances, the funeral home was left to make up any shortfall of consumer funds. When the stock market and housing market tanked, funeral homes were financially devastated when they suddenly had to make up the large deficit. Georgia enjoys some of the strongest consumer protection in the country relating to preneed. In our state, funds are 100% portable and refundable and belong to the CONSUMER until death; they do not belong to the funeral home. GFDA believes that consumers who pre-pay funerals do not expect any risk on those funds; consumers believe those funds will be there when needed.

In Georgia, you should know that banks are weighing in on how our professions should handle preneed escrow funds. We respectfully don’t believe they should have any involvement in a funeral/cemetery question of how best to work with our own customers. The goal of the banks is to earn Trustee fees on large trust accounts, and they will get those fees regardless of how well or poorly the investments might do. Under current law, the banks of course invest money, but individual accounts are protected by FDIC, so the consumer is protected. Please understand, Georgia trust law is different and trust accounts are NOT insured unless deposited into CDs, Treasury notes, Treasury bonds or savings bonds. Rep. Sims’ bill preserves the protection on funeral escrow.

On the other hand, cemeteries in Georgia wish to pursue that type of investment because their business model has a much longer time-frame (can be 80 years) and typically include a plot or plots. Even if an investment fails, the consumer still has their plot. The risk is much lower, even accounting for some burial merchandise. Accordingly, GFDA was not opposed, but does think law requires informed consent by the consumer because escrow funds are the consumer’s until death and not the property of the cemetery or funeral home. In other words, we don’t think you can invest someone else’s money without telling them there is risk involved.

GFDA believes that any type of risky preneed investment is ultimately bad for the funeral profession. You as the licensed professional are the person who would sit across from a family having to tell them their money is not there. It would not be the banker or the cemetery owner; you are on the front line.

HB953 accomplishes several other items in addition to insuring that funeral pre-paid funds remain secure:

1. Adds preneed insurance as a method for pre-need; this is already a practice but is missing from GA Code.

2. Clarifies the definition of various methods of disposition to include any professionally accepted process.

3. Adds the ability to accept an electronic signature on a funeral contract.

4. Clarifies the language relating to burial societies and eliminates the loophole whereby companies are subverting the law by simply changing their name to cremation or funeral society

5. Allows apprentices to earn some of their apprentice hours while in mortuary college. Currently, an apprentice in a regular college curriculum can earn apprentice hours, but in our own colleges can’t earn toward their own profession. (proposed by State Board).

6. Splits Cemetery and Funeral Service back into 2 professional areas to correct the problems caused by the year 2000 law.

7. A funeral director in full and continuous charge and/or the owner of a licensed cemetery would be exempt from filing as a preneed dealer. Under their main license, the law already allows them to do what the preneed license also does. Therefore it is duplicative and not needed.

8. Requires any preneed insurance contract that lists the name of a specific funeral establishment to be signed by that establishment. Currently, unscrupulous individuals have been putting funeral home names on insurance contracts without the funeral home’s knowledge and quoting their GPL; later, the consumer and insurance company find that the funeral home has no contract and no knowledge of any guarantee of services.

9. Maintains current law that funeral homes escrow 100% of funeral preneed in a trust to be invested in secure financial instruments.