Indiana Funeral Home Law

Notes from a project for my father that never seems to get very far. With some luck the following listing of Indiana sources might be of use:

1. Indiana Code - Licensing Laws
2. Indiana Administrative Code.
3. PLA: State Board of Funeral & Cemetery Service
4. PLA :: License Litigation.

The last link should interest anyone dealing with any Indiana professional license that is regulated by the Indiana Professional Licensing Agency.

Consumer Law News: Antitrust and Caskets

Antitrust Case Against Funeral Industry Ailing, But Not Dead Yet - Law Blog - WSJ

So we suppose we weren’t entirely surprised when we read this morning of a case taking shape down in Houston, where a group called the Funeral Consumers Alliance have sued the leading casket maker and three major funeral home chains, alleging a nationwide price-fixing conspiracy. Click here for the story, from the American Lawyer’s Alison Frankel. (Frankel’s lead gave us a chuckle: “The assertions of a putative class led by a group called the Funeral Consumers Alliance are enough to make anyone opt for cremation.”)

The Alliance has alleged that as a result of the conspiracy, unsuspecting casket buyers are forced to pay perhaps twice as much as they would if there were true competition in the market.

That said, according to Frankel, the class action has, uh, “one foot in the grave” after a two-page ruling last week by Houston federal district court judge Kenneth Hoyt. Hoyt denied class certification, adopting without additional discussion the memorandum and recommendations filed last December by magistrate judge Calvin Botley. Botley had rejected the plaintiffs’ arguments, finding not only that individual issues predominated, but also that the plaintiffs hadn’t shown evidence of a conspiracy.

Consumer Law: Funeral Homes in the News

Probably not a good statistic for funeral homes or for consumers: One in four funeral homes not playing by the rules

The two locations with the most violations were Northeastern Arkansas, where 73% had serious violations, and San Antonio, where 64% flunked, the FTC reported. All the inspections were conducted in 2008. Minneapolis/St. Paul and Toledo, Ohio, funeral homes fared the best. Each had only one funeral home found to have serious violations.

Here are the results from the other locations:

* Fairbanks and Anchorage, Alaska. 11 funeral homes inspected; two had significant violations
* Orange County, Calif., 18 funeral homes inspected; two had significant violations
* Nassau County, N.Y., 18 funeral homes inspected; two had significant violations

Undercover Inspections of Funeral Homes in Seven States

In general, the Funeral Rule requires funeral homes to give consumers an itemized General Price List (GPL) at the beginning of an in-person discussion of funeral arrangements, and show them a Casket Price List before they view caskets. The Rule also prohibits funeral homes from requiring consumers to buy any item, such as a casket, as a condition of obtaining any other funeral good or service. By requiring itemized prices, the Rule gives consumers the ability to compare prices among funeral homes and buy only the goods and services they want.

Funeral Home Rule and Crematories

The Federal Trade Commission has a new opinion letter on how the Funeral Home Rule applies to crematories. You can reach this letter (which is in PDF format) here.

The letter ends with the usual disclaimer of opinion letters:

As you know, the views expressed in this letter are those of the FTC staff. They have not been reviewed, approved, or adopted by the Commission, and they are not binding on the Commission or any individual Commissioner. However, they do reflect the views of FTC staff charged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted on the FTC website at http://www.ftc.gov/bcp/conline/edcams/funerals/staffopinions.shtm.

But I find no fault with the reasoning of the staff on this issue.

New Rules on Who Can Sell a Casket

Just a brief roundup (albeit a tardy one) on rules relating to funeral services:

License not required to sell coffins

Newly enforced cemetery rules upset Magnolia mother

Good News for the Sooner

Pre-Need Funerals - Ohio Senate Passes a Consumer Protection Bill

I cannot help but wonder if legislation like this reported in the Lancaster Eagle Gazette Ohio Senate Passes Pre-Need Funeral Consumer Protection Act is not related to the Nelms/Memory Gardens case here in Indiana:

"Under Senate Bill 196, increased consumer disclosure is required when an individual purchases pre-need funeral services, including: How it is funded; revocation rights; under what circumstances a consumer can transfer pre-need arrangements to another funeral home; that the consumer is entitled to receive price information in accordance with the Federal Trade Commission Funeral Rule; and that the insurance company or trustee that receives monies pursuant to a pre-need funeral contract is required to notify the consumer in writing when monies are received."

Following up on "More Fall Out From the Nelms/Memory Gardens Case"

I noticed Cemetery trust money should go to a third party from The Grand Rapids (MI) Press and realized I had not followed up on More Fall Out From the Nelms/Memory Gardens Case. HB 1026 did become law is now effective according to the Indiana Bill Info site.

Funeral Home News: What is the FTC doing in Pittsburgh?

WTAE from Pittsburgh reports that the FTC followed up the television's investigation into the area's funeral homes compliance with the FTC Funeral Home Rule. Now the strangeness apparently starts:

But the FTC refuses to tell consumers exactly what the funeral homes did that was wrong.

***

But the FTC refused to make public the nature of the violations at Cooke Funeral Home. Details of the violations are whited out from the documents that Team 4 requested.

All this sounds very ominous until one gets down towards the end of the story:

The FTC took no action against Lanigan, but it did require the other four to enter the Funeral Rule Offenders Program, a three-year educational program operated not by the government but by the funeral home industry itself.

And that's the trade-off for offenders. They agree to enter the FROP program, and the public will never find out what they did wrong.

I have yet to deal with the FROP program - and hope never to do so. See, I agree with one of the other Pittsburgh funeral directors:

East Pittsburgh Funeral Director Pat Lanigan was also visited by undercover FTC agents, who later sent him a compliance letter claiming his business committed "very serious violations of the (funeral) rule." But the details of those violations were erased from the copy of the letter the FTC sent to Team 4.

"In my case, somebody could make up any story in any figment from their imagination about what I did wrong, and we didn't do anything wrong," said Lanigan. "Actually, it was just a misinterpretation by the FTC of our price list."

I think combining a higholy publicized story with a the anonymity of FROP creates a nasty situation implied by Mr. Lanigan.

Luckily, Indiana funeral directors have not had a sweep like this one in Pittsburgh. That does not mean we can assume none loom in the future. Do a good audit of your procedures and make sure that your people get trained thoroughly in the Funeral Home Rule.

The Indiana Funeral Home and Cemetary Law Wiki

While not yet ready for public display, I decided about six weeks ago to work on a special project involving Indiana's law on funeral homes, cemeteries, and related subjects.

Why a wiki? Because unlike this blog, a wiki is meant for collaboration. Binary Law's Blogs vs wikis for an explanation of the uses of a wiki versus a blog. For more of an explanation what is a wiki there is Video: Wikis in Plain English or this Wikipedia entry.

Being meant for collaboration requires collaborators. I invite any Indiana lawyers representing funeral directors or funeral homes or cemeteries to send me an e-mail - if they want more information. For those wanting to a very rough draft of a work in progress, click here.

Any further writing by me about the law of funeral homes, cemeteries, and related subjects will take place there and not here. This is also the start of my reshaping this blog to fit a bit better my current practice and provide a bit more of a focus to the blog itself.

Who Controls Indiana Cemetery Plots?

Let us assume one person wants to buy a headstone for another person's grave site, can they do so? This question depends on the ownership of the burial plot.

Indiana statutes define the ownership rights to multi-space plots. joint multi-space plots, and family burial plots. Only the first type of plot presents the prospect of a single owner of the plot. So long as another person has a property interest in the burial plot, I cannot see any way of putting a headstone on the grave site without the co-owner's permission. That is simple property law.

Consumer: The FTC Funeral Rule and Funeral Consumers Alliance

The Funeral Consumers Alliance site has information The FTC Funeral Rule. This is something every consumer ought to read. Why? The FCA says it quite well:

"The Funeral Rule, enforced by the FTC, makes it possible for you to choose only those goods and services you want or need and to pay only for those you select, whether you are making arrangements when a death occurs or in advance. The Rule allows you to compare prices among funeral homes, and makes it possible for you to select the funeral arrangements you want at the home you use. (The Rule does not apply to third-party sellers, such as casket and monument dealers, or to cemeteries that lack an on-site funeral home.)"

Funeral Consumers Alliance has chapters in Bloomington and Valparaiso.

Funeral Industry Blogs

Two.

I categorize the first as a consumer oriented blog: R.Brian Burkhardt "YourFuneralGuy & Author "Rest in Peace--Insider's Tips toThe Low Cost Less Stress Funeral"'s Amazon Blog.

The second comes from a lawyer, Death Care Compliance Law. I really like this one - it has a national viewpoint and the writer seems more familiar with funeral homes than most lawyers.

Following up on the Nelms case

While the State of Indiana goes after Robert Nelms for possible fraud regarding cemetery funds (see my post here, here and here), The Indianapolis Business Journal reports others sued the financial services firms, Memory Gardens lawsuit seeks $20M:

An Indianapolis law firm has filed a class-action suit seeking more than $20 million from a pair of financial-services firms it says facilitated the transactions that allowed a New Jersey couple to plunder cemetery trust funds.

Cohen & Malad LLP filed the lawsuit late last month on behalf of thousands of customers of Indianapolis-based Memory Gardens Management Corp., which owns Forest LawnMemory Gardens in Greenwood, Lincoln Memory Gardens in Boone County and other cemeteries. The defendants are the company, New York-based Smith Barney and a Noblesville bank formerly known as Community Trust & Investment Co.

The case is the latest fallout from a massive fraud investigators say was perpetrated by the New Jersey couple, Robert Nelms and Debora Johnson. Marion County prosecutors last month charged Nelms, 39, and Johnson, 48, with nine felony counts each. Investigators say the pair raided $24 million in trust funds that were supposed to maintain cemetery grounds and cover prepaid burials and funerals.

Estate Planning: Inheriting cemetery plots

Indiana law declares how one inherits a funeral plot.

Generally, the buyer owns what they purchase ("...the burial rights in a lot, plot, burial space, crypt, or niche...") with two exceptions. First, the buyer has "more than one (1) interment, entombment, or inurnment space" and has have a spouse at the time of purchase. See IC 23-14-39-2 and IC 23-14-39-3. The spouse loses this right upon divorce unless the decree of dissolution provides otherwise. In twenty years of practicing law, funeral plots never figured into any of my divorces.

Where more than one person purchases burial rights together, the law presumes they have a joint tenancy (a tenancy by the entirety for married persons)with rights of survivorship. Note this: the law does not change if the person purchasing the burial rights are of the same sex. By creating a joint tenancy with right of survivorship, these burial rights pass to the survivor without need of probate. See IC 23-14-40.

If the owner has no wife or joint tenant, the owner can pass through the owner's probate estate (whether dying with or without a Will). The statute has several exceptions making quotation of the statute easier than paraphrasing:

IC 23-14-42-4 Upon the death of the record owner of the burial rights in a burial plot, the burial rights pass as part of the estate of the owner if:
(1) the record owner did not dispose of the burial rights by:

(A) a specific devise in the last will and testament of the record owner; or
(B) a written designation or transfer of ownership recorded with the cemetery under section 2 or 3 of this chapter;

(2) the burial rights have not become vested in another individual under IC 23-14-39 or IC 23-14-40;
(3) the burial plot does not become a family burial plot under IC 23-14-41 before the instrument referred to in subdivision (4) is recorded with the cemetery; and
(4) an instrument that:

(A) is prepared in accordance with IC 29-1; and
(B) documents the person or persons entitled to become the new record owner or owners of the burial plot and to receive the burial rights as part of the deceased record owner's estate;
is recorded with the cemetery.

Bottom line: another person can inherit burial rights either as joint tenant or through a probate transfer.

Consumer : Following Up on "Cemetery Problems"

The Indianapolis Star reports, Temporary receiver named for Nelms properties, about the Johnson County court appointing a temporary receiver in the Nelms case.

Johnson County Circuit Court Judge Mark Loyd selected attorney Lynette Gray as a temporary receiver over Memory Gardens Management Corp., which includes Forest Lawn Memory Gardens in Greenwood and other cemeteries in Michigan and Ohio.

Robert E. Nelms, 39, and Debora Johnson, 48, were charged in Marion County Jan. 17 with nine felony counts each. The counts include theft and violations of a cemetery perpetual-care fund.

For Indiana law on receivers has two places to start - Indiana Trial Rule 66 and IC 32-30-5. Neither statute nor Trial Rule make any mention of a temporary receiver, but then they do declare a court lacks the power for appointing a temporary receiver.

Indiana Code 32-30-5-7 sets out the receiver's powers:

The receiver may, under control of the court or the judge:

(1) bring and defend actions;
(2) take and keep possession of the property;
(3) receive rents;
(4) collect debts; and
(5) sell property;

in the receiver's own name, and generally do other acts respecting the property as the court or judge may authorize.

If The Star correctly reported the reciever as being temporary, I guess the purpose would be having somone having possession of the company's property until there can be a full hearing on the receivership.

For my earlier post on the Nelms case see Cemetery Problems.

Consumer news: Cemetery Problems

Cemetery ownership found themselves in the news this past week with headlines like Cemetery owners charged with fraud. What happened?

Robert Nelms, 39, and Debora Johnson-Nelms, 48, face multiple counts of theft, fraudulent or deceitful acts, violations of a cemetery perpetual care fund and using a perpetual care fund for prohibited loans. Nelms is president and chief executive officer of Memory Gardens Management Corp., which has Indiana locations in South Bend, Fort Wayne and Greenwood, where it owns Forest Lawn Memory Gardens.

In December 2004, according to court documents filed today in Marion Superior Court, the couple agreed to purchase the company for $27 million from owner Fred Meyer of Indianapolis. The Nelmses, who already had operated funeral homes in New Jersey and New York, arranged a bridge loan for the $13.5 million down payment, a probable cause affidavit says.

After the purchase, the loan was repaid using money from the company's trust fund, the affidavit says, even though that fund must be used to care for grave sites and cemetery grounds. That trust fund was transferred to a new bank, and all of the money in the account was withdrawn by April 2005, the affidavit says.

So far I have seen only one news story pointing out that these are cemetery funds and not pre-paid funeral trust funds. That story, Pirkle: Management problems don’t apply to local funeral home, came out of Washington, Indiana:

Michelle Brown with Gill Funeral Home said, “Nothing (misappropriated funds) has come from here because we’re not a cemetery. All (prepaid funeral arrangements) are bank trusts and are backed by a certified copy of death.”

The funeral home can’t access the money paid in to prepay for funerals until the bank is presented with a death certificate, according to Brown. Nelms, nor anyone else in the business, could access the money.

Since I advocated pre-paid funeral trusts as part of estate planning, emphasizing the difference between funeral trusts and perpetual cemetery funds is important for the public.

Indiana law describes with specificity how the cemetery is to set up and run a perpetual care fund.

That specific criminal penalties apply to misusing perpetual care funds does not clearly appear in the newspaper stories. The Indianapolis Star buried this paragraph towards the end of today's Cemetery case could spur other charges:

Keown, from the cemetery association, said the Nelms investigation prompted him to work with Indiana legislators to pass tougher penalties during the 2007 session. As a result, some of the charges against Nelms and Johnson were boosted from infractions to Class C felonies.

That statute reads as follows:

IC 23-14-48-9 Violation of chapter

Sec. 9. (a) Except as provided in subsections (b) and (c), a person who knowingly violates this chapter commits a Class A misdemeanor.

(b) A person who makes a false or fraudulent representation as to the existence, amount, investment, control, or condition of a perpetual care fund of a cemetery for the purpose of inducing another to purchase any burial right commits a Class C infraction.

(c) A person who knowingly or intentionally uses funds in a perpetual care fund or an endowment care fund established under this chapter for purposes other than the perpetual care of the cemetery for which the perpetual care fund or endowment fund was established commits a Class C felony.

Indiana does not list all its crimes in its criminal code and this serves as a reminder that bad business behavior may have criminal consequences.

Estate Planning: About Paying for a Funeral

Estate planning includes funerals? Yes. Medicare exempts pre-paid funeral plans from the money the federal government can grab. If nothing else that ought to make them attractive to the public.

Can I just put all that in a Will? No. The Will sees probate after the death and not before.

Does a lawyer set up a funeral trust? No, you can do that through a funeral director. See FUNERAL PLANNING on the Indiana Funeral Director Association's website.

Reading Funeral costs can be headache for families unprepared in the Muncie Star-Press brought all this to mind.

The struggles of a local family trying to bury their loved one should serve as a cautionary tale when planning a funeral, funeral experts say.

Betty Randolph, 68, died Friday, Dec. 21. Her daughter, Shirley Morris, and sons Ronnie and Jerry Randolph, made arrangements for their mother's burial at Garden View Funeral Home.

***

Because of the Christmas holiday, Garden View could not immediately verify whether Randolph's insurance policies would cover her burial costs. The funeral home allowed the family to have a visitation and funeral service for Randolph, but when the policies failed to cover those costs, Morris and her brothers didn't have the money to pay for her burial.

"We thought she had a $5,000 insurance policy, but it was no good because she had let it lapse," Morris said. "Another she took out in 2006 will only pay about $1,000 because she had to be alive two years to get full benefits."

The Star-Press article includes information on pre-need planning. The article nails the most important non-financial reason for pre-planning a funeral:

The other option for families is to plan ahead, says Curtis Rostad, executive director of the Indiana Funeral Directors Association.

Rostad encourages people to pre-pay for their funeral arrangements -- an option that alleviates the cost and stress of decision-making for family members after the person is deceased.

(The article also mentions that Indiana's township trustees provide money for funerals of low income people.)

Indiana law has two kinds of pre-paid funeral trusts. One funded by cash and the other by an insurance policy. I have an article dealing more specifically with the law here. I think (but have no evidence to back me up here) most people are using insurance policies to fund the funeral trust. For an example of a pre-arrangement program see MASTERCHOICE® FUNERAL TRUST.

Setting up a pre-paid funeral trust means going to the funeral home and selecting the sort of funeral you want. Before going to the funeral home, you should read the Federal Trade Commission's Funerals: A Consumer Guide. The FTC's Funeral Home Rule requires a funeral home to display a price list that includes all goods and services the funeral home will provide to the buyer. The funeral trust funds whatever the buyer selects.

I know no one likes to consider Wills and estate planning or funerals, but not doing can leave your survivors making the choices and may leave them in the same position as the Randolph family.

Indiana's pre-paid funeral trusts, part 1

A disclosure before going any further - my father is a funeral director. All this means is that I have seen both sides of the pre-need funeral trust issue. My father drummed into me one good, practical use for this kind of trust: it removes the burden from the survivors in selecting the funeral.

What I have learned about funeral trusts since beginning my practice in 1987 is that people think they can put their funeral arrangements in their Wills. No can do. Funeral trusts create the means for people to set out and control their funerals.

In my opinion, estate planning ought to include pre-need funeral trusts. Pre-need funeral trusts provide a valid deduction for Medicare purpose. So for that reasons as well as those I have already given are why I think pre-need funeral trusts need to be included into any estate planning.

Indiana has three statutes relating to funeral trusts: Prepaid Funeral Plans and Funeral Trust Funds Established Before 1982 (IC 30-2-9), Funeral Trust Funds, Payment of Funeral (IC 30-2-10), and Burial Services, or Merchandise in Advance of Need (IC 30-2-13). I will be discussing all of them in other posts.

Final Resting Place a Gas Tank?

Combining estate planning and funerals homes is rather common in my practice. Combining those subjects with cars is uncommon. If you listen to National Public Radio, then you are probably aware of the show "Car Talk." No other show mines the humor in car repair and maintenance as does "Car Talk". I never thought the show would be the subject of a blog post, especially one related to estate planning. Actually, the show was the subject of posts on two different blogs and this is the third. The following is from Charles R. Goerth's blog:

Disposal of remains is not a laughing matter, but laughter can be excused if the remains are one’s own, I guess.

That’s what I concluded upon reading the posting today on Neil E. Hendershot’s Estate Planning Blog relating the Car Talk exchange between Click and Clack regarding use of an automobile to dispose of one’s cremains. (Cremains is the current descriptor in some quarters for cremation.)

Yes, that kind of topic does raise an eyebrow or maybe both. Both previous writers handle the issue quite well, but I came to a stop at this point:

Thinking about what to do with cremains is a question which comes up regularly in estate planning consultation. But first, recognize that this direction for disposition of remains shouldn’t appear in a Will. It should go into a Health Care Power of Attorney.

Mr. Goerth does not explain that a Will does not get probated until after the funeral. As in Pennsylvania, Indiana law gives the person designated to have the power of attorney (they are called an attorney-in-fact) under a Health Care Power of Attorney the power to decide on the principal's (that is the person creating a Power of Attorney) funeral arrangements. However, Indiana law also provides another method for the setting up of funeral arrangements prior to death. This other method is a pre-need funeral trust.

I always mention a pre-need funeral trust to my estate planning clients. The funeral homes do the paperwork for this kind of trust. The client would go to the funeral home of their choice, make their funeral arrangements (and I am including cremation when I use "funeral" here), and an insurance policy is bought to fund the trust. Nothing further needs done by anyone - client, family, or attorney-in-fact - when time comes to make any funeral arrangements. The client receives the funeral that the client wants without imposing upon the attorney-in-fact the hard choice of making funeral arrangements.

Daughter tries to steal ring off of dead's mom's finger

From Wills, Trusts & Estates Prof Blog:

Mrs. Svajada of Corpus Christi, Texas left instructions to be buried wearing her ring

As the ring was worth $7,000, her daughter and friend decided that it was a "waste" to bury the ring and thus attempted to pry the ring off the Mrs. Svajada's body during the funeral. The daughter was charged with felony theft.

See AP, Woman charged in theft from mom's coffin, Feb. 16, 2007.

Charming. Sounds like Springer Show material.