New York State Funeral Directors Association

The Security of Preneed Funeral Funds in New York State

New Yorkers, like all consumers, understandably want to be sure the funds they set aside in a preneed funeral trust account are safe and secure. The following is a series of fundamentally important questions about the protection of preneed funds.

How does New York State protect preneed funds compared with other states?

Consumers in New York who prefund their funerals have their money protected by what are truly the strongest preneed laws in the nation.

These laws require that 100% of preneed funds be deposited in an interest-bearing, government backed trust account where the principal and interest earned remain the property of the consumer.

The purchaser remains in control of the preneed account. If the account is revocable, a purchaser may request a full refund of the principal and interest earned at any time, for any reason, without penalty.

The purchaser may also select a new funeral home at any time.

New York State law also mandates full disclosure to the consumer by requiring that written statements be sent containing information on the funds deposited to date, where they are deposited and the amount of interest earned.

Under New York State law, applicants or recipients of Medicaid or Supplemental Security Income (SSI) may set aside funds in an irrevocable trust account for the sole purpose of paying their funeral and burial expenses, and those of their family members.

The funds in an irrevocable funeral trust are exempt from being counted as a resource. By law, funds in an irrevocable trust account cannot be refunded, but the purchaser may select a different funeral home at any time.

What is the difference between a revocable preneed account and an irrevocable preneed account?

In New York State, an individual applying for Medicaid or SSI may set aside funds in an "irrevocable" account for their – and their family members’ - future funeral/burial expenses.

These funds are considered an excludable asset in determining program eligibility.

The account must be established as "irrevocable" if the beneficiary has applied for - or is currently receiving - Medicaid or SSI, or if they choose to establish preneed accounts for their family members.

Funds set aside in an irrevocable account may not be refunded and any funds remaining ("overage") in the account after payment is made for all funeral services and merchandise must be forwarded to the appropriate agency of the county where the beneficiary was residing at the time of death.

Again, in contrast, a revocable account in New York State is fully refundable upon demand. Any overage remaining in a revocable account after the funeral services and merchandise have been provided must be forwarded to the estate of the beneficiary.

Both irrevocable and revocable preneed accounts are totally portable. A purchaser may choose at any time to use a different funeral home, even if in another state, and is free to transfer the funds there without penalty or cost at any time.

May a funeral director charge a fee for planning a prepaid funeral?

No, in New York State, funeral directors cannot charge any fee for prearranging a funeral.

Are there any fees associated with planning a prepaid funeral?

Yes, PrePlan, like any preneed funeral trust, is permitted by law to expend up to seventy-five hundredths of one percent (.0075%) of the principal sum in the fund to provide management and administrative services to operate and staff the fund. A minimal fee is also paid for the expert investment advice given to PrePlan for the benefit of its customers.

Of course, these terms are fully disclosed in the preneed agreements and provided in detail to consumers annually in a Grantor Trust Tax Information Statement.

How does a funeral home get paid from the PrePlan Trust Fund?

PrePlan requires a certified death certificate to close an account. After verification of authenticity, the full balance in an account - including interest accrued - will then be disbursed by check or electronic fund transfer to the funeral home listed on the death certificate.

What Happens if the funeral home closes?

A frequent question among consumers who have preplanned their funeral service is "What happens if the funeral home closes?"

Fortunately, preneed funds are forwarded to an interest-bearing account with a separate financial institution in the purchaser's name. The purchaser remains in control of those funds at all times.

In the event of a funeral home closing, all account holders must be notified in writing within 30 days.

They may then choose to transfer the funds in their preneed account to another funeral home or, if it is a revocable agreement, they may request a refund of their deposits plus all interest earned.

The New York State Health Department Bureau of Funeral Directing regulates funeral service and closely monitors this process.

How long has PrePlan been serving its member funeral homes in New York State and their consumers?

PrePlan is the funeral sector's leader in preneed funeral trust fund management. We maintain preneed funeral accounts for over 90,000 individual consumers. PrePlan was established in 1988 as a member service of the New York State Funeral Directors Association, the oldest funeral directors association in the United States.

What safeguards has PrePlan implemented to guarantee the safety and security of the funds entrusted to them?

PrePlan invests solely in certificates of deposit. With the hands-on assistance of a well-respected investment advisory firm and five PrePlan Trustees, investments are made with a large, diversified group of thoroughly researched, highly-rated banks. Each accountholder in the master trust program of the New York State Funeral Directors Association is federally insured up to the limit provided by Federal law (currently $250,000).

PrePlan is audited on a quarterly and annual basis by an independent auditing firm. This includes a thorough internal controls evaluation designed to identify and eliminate any potential areas at risk for fraud.

PrePlan has a firm commitment to the confidentiality of all sensitive consumer information. We employ the strongest security protection for our Web site:, and routinely shred all documents containing such personal information.

NYSFDA added yet another layer of protection through the formation of a standing Audit Committee comprised of individuals who are knowledgeable in finance, business management and accounting, and well-equipped to wade through complex financial statements and audit reports on behalf of our member funeral homes and their consumers.