The American Way of Death Revisited - Jessica Mitford [146]
Sincerely yours,
Peggy F. Porter
Enclosures
This situation in Louisiana may serve as an example of problems elsewhere. Lee Norrgard, consumer affairs analyst for AARP, has been monitoring the problems of prepaid funerals. In Final Choices: Making End-of-Life Decisions (ABC-CLIO, 1992) he writes: “Is there adequate consumer protection for buyers of preneed plans? At this point, the answer is no. Regulations, investigations, and auditing are minimal in most states. In at least one instance, some of the worst abuses surfaced as a result of private legal actions rather than state enforcement activities.… Buyer beware!”
The Consumers Digest article reports that “about $50 million in preneed funds was stolen or reported missing nationwide.” As of 1997 only seven states had some sort of guarantee fund to protect consumers against such default: Florida, Indiana, Iowa, Missouri, Oregon, Vermont, and West Virginia.
Anyone who has paid for a funeral—or is thinking about it—should ask, “Where is the money invested and is it safe?” There are several ways to handle funeral financing in advance, some safer than others.
When you make out a check to the mortuary to pay for a pre-need funeral, there is no guarantee that the money will find its way to safekeeping. One funeral director complained that he hadn’t had a funeral in thirteen weeks and was worried about how to meet business obligations. When “Mildred” prepaid for her funeral, he used the money for his mortgage payments, despite the fact that the state required that 100 percent of the funds be placed in a federally insured institution. It’s likely that he had every intention of taking care of Mildred when she died, but when the state finally put him out of business for other misdeeds, officials discovered that $150,000 in prepaid funeral money—including Mildred’s—had vanished.
Few states require that all prepayments be placed in trust. Fewer still do any auditing. This is particularly true of cemetery prepayment and perpetual-care funds. The cemetery owners generally have unrestricted access, which accounts for the scandalously high incidence of misappropriation of endowment care funds. Without conscientious auditing, there can be no assurance that prepaid funds are safe. California, which is one of the few states that require 100 percent trusting of funeral prepayments, also leads the nation in the incidence and the magnitude of the thievery.
Perhaps most at risk are those in small towns—where everyone knows everyone—who place great trust in the local funeral director. In 1977, after receiving an estimate of $587 for the simple funeral she wanted, Annie Patterson sent a note to the man she thought of as “her” funeral director:
I will be sending a little each month as I am living on Social Security.
Annie told her children that “it was all taken care of,” and—because she was a meticulous and responsible person—no one doubted her.
When Annie died almost twenty years later, “her” funeral director had already passed away. A son had taken over the business, but Annie’s family felt comfortable calling the small-town funeral home she had trusted for her final care. The first sign of trouble came when they were told, “You know it will be more than $587, don’t you?” When a final funeral bill was presented for $3,695, there was no mention of the $587 that had been prepaid, let alone any interest that might have accumulated. The family was shocked. A simple cremation and graveside service was all they had arranged. A scramble through Annie’s shoe box of important papers turned up no receipts. Annie had never used checks; she always paid in cash.
Insurance policies generate a relatively low rate