SI KC01130.420 Prepaid Burial Contracts (RTS 11, 10/2006)
See SI 01130.420
Existing laws in all the States in our region are now such that a burial contract may be either revocable or irrevocable.
Under Iowa law, prepaid burial contracts may be irrevocable as follows:
The prepaid burial contract executed between an individual and a funeral director or embalmer must expressly state that it is irrevocable.
A burial trust executed between an individual and a bank for the express purpose of discharging burial expenses is irrevocable unless the power of revocation is expressly reserved in the agreement.
Iowa law does not limit the amount of funds that may be placed in an irrevocable burial contract.
Interest and dividend payments made under these agreements are also irrevocable.
Kansas statutes provide, that at the option of the purchaser prepaid burial contracts may be made irrevocable up to a specified amount.
Effective July 1, 2004, K.S.A. 16-303 increased the dollar amount to $5,000. From July 1, 1998 to June 30, 2004, the prepaid burial contracts may be irrevocable as to the first $3,500 paid under the agreement. Effective July 1, 1991, to June 30, 1998, the amount was $3,000.
Any interest or earnings, etc. accumulated from the irrevocable amount under the contract are also irrevocable.
Kansas has no dollar limit on irrevocability of a contract for burial space items.
Some contracts may be for both burial space items and funeral services. If the amount for burial space items is designated, then only the portion not designated for burial space items is applied toward the applicable irrevocable limit.
A $7,000 irrevocable burial contract designates $4,000 for a casket and vault (burial space items) and $3,000 for the funeral service. Only $3,000 of this contract would be applied toward the $5,000 irrevocable limit. This is the amount that is not designated for burial space items. In this example, no part of this contract would be considered a resource.
Effective August 13, 1982, Missouri statutes were amended to provide that prepaid funeral plans may be irrevocable as follows:
Any individual who is eligible or desires to become eligible for public assistance under State or Federal law, may make a prepaid burial contract irrevocable by executing a written waiver of their right to cancel the contract, and delivering the same to the seller of the contract.
Prepaid burial contracts entered into prior to August 13, 1982, may be made irrevocable by executing the above waiver. The date the waiver is executed is the date the contract becomes irrevocable.
Missouri statute does not limit the amount of funds that may be placed in an irrevocable burial contract.
Depending upon the terms of the contract and/or waiver, accumulated interest or dividends on the contract may also be irrevocable.
At the written request of the purchaser a limited amount prepaid by the purchaser may be designated as irrevocable. The Nebraska Burial Pre-Need Sale Act amended section 12-1106 of the Nebraska statutes to permit the first $4,000 to be designated as irrevocable effective July 14, 2006. The statute also indicates the amount shall increase annually on September 1 by the percentage change in the Consumer Price Index.
Effective September 1, 2016, the irrevocable pre-need amount is $4,978. Effective September 1, 2017, the irrevocable pre-need amount increased to $5,031. The link to a chart of all increases since 2006 and for future updates is at the Nebraska Department of Health and Human Services website here.
Any interest or dividends accruing to such irrevocable agreement may also be irrevocable.