SI DAL01130.420 Prepaid Burial Contract

See SI 01130.420

Policy — contract irrevocability

"Prepaid burial contract" is a generic term that includes contracts, trusts, escrow accounts, and similar instruments (including prepaid funeral plans funded by life insurance) through which an individual may prepay burial services. Some States also refer to these agreements as "prepaid funeral benefits plans." This transmittal uses the generic term of "prepaid burial contract" when referring to these agreements. The following instructions provide details regarding State laws in the five States in Region VI.

1. Arkansas

The "Prepaid Funeral Expense Act of Arkansas," effective June 28, 1985, provides the statutory basis for the sale of prepaid burial contracts in Arkansas. Burial contracts in Arkansas may be revocable (with mutual consent) or irrevocable according to the terms of the individual contract. However, prior to June 28, 1985, all contracts were irrevocable unless the buyer moved out of the State or moved more than 50 miles from the provider of the goods or services.

The prepaid contract should be examined to determine whether it is revocable or irrevocable.

2. Louisiana

Burial contracts in Louisiana may be revocable or irrevocable. In 1982, Louisiana amended Chapter 10, title 37 of the Louisiana Revised Statutes to allow the sale of prearranged or prepaid burial contracts. This act also permits the sale of prepaid funeral spaces. This Act provides that "the purchaser may withdraw funds by written notice to the seller requesting release of the depository document held by the seller, or if the purchaser so desires may by the purchaser's own request and by written notice to the seller at any time during the life of the contract, render any amount of the contract irrevocable. To determine if a prepaid burial contract in Louisiana is revocable or irrevocable, examine a copy of the contract. Also, obtain any alleged written statement that waives and renounces the purchaser's right to cancel the contract.

3. Oklahoma

Prepaid funeral contracts in Oklahoma may be revocable or irrevocable. However, State law provides that the irrevocability election cannot be effective until 30 days after purchase of the burial agreement. Therefore, ALL burial contracts regardless of the language in the contract are revocable for the first 30 days after they are purchased.

Prepaid burial contracts in Oklahoma are limited to no more than $10,000.

To determine if a prepaid burial contract is revocable or irrevocable in Oklahoma, examine a copy of the burial agreement. If the contract does not contain an election of irrevocability, State law declares the contract revocable.

4. New Mexico

The sale of prepaid burial contracts in New Mexico is governed by the "Prearranged Funeral Plan Regulatory Law." The law does not specifically address irrevocability; however, it can be implied from Article 49 Section 59A-49(B) of the law that burial contracts sold in New Mexico are revocable.

Burial contracts in New Mexico are treated as burial funds (less any burial space items separately identifiable) subject to the $1,500 burial fund exclusion.

5. Texas

Prior to September 1, 1993, Texas law only permitted the sale of revocable prepaid burial contracts. However, legislation effective this date provides that burial contracts may be revocable or irrevocable. In addition, the law further states, "(t)he purchaser of a prepaid funeral benefits contract may irrevocably waive or renounce the purchaser's right to cancel the contract. The waiver and renunciation may be included as a provision of the contract or be made in a separate writing signed by the purchaser and the seller."

To determine if a prepaid burial contract in Texas is revocable or irrevocable, examine a copy of the contract. Also, obtain any alleged written statement that waives and renounces the purchaser's right to cancel the contract.


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SI DAL01130.420 - Prepaid Burial Contract - 10/20/2022
Batch run: 04/21/2023
Rev:10/20/2022