SI CHI01130.422 Indiana Prepaid Burial Contracts
Burial contracts in Indiana may be funded with cash (in a lump sum or installments) or with life insurance policies. After June 30, 1978, following the initial 30-day period during which the purchaser may cancel, burial contracts must be irrevocable. Property used to fund burial contracts are held in irrevocable trusts or escrow accounts with a bank, trust company, savings and loan association or credit union whose principal office is in Indiana, with the seller as the trust beneficiary. The purchaser may designate a successor seller upon proper written notice to both sellers and the trustee of the trust or escrow account and with consent of the new seller. "Seller" is defined as the person, firm, Limited Liability Company, corporation, association or partnership contracting to provide services or merchandise or both.
Burial contracts entered into after June 30, 1978, in Indiana are irrevocable beyond the first 30 days after signing and are not resources for SSI purposes, unless the purchaser makes a contract immediately irrevocable. Where the purchaser makes the contract immediately irrevocable, the contract is not a resource even for the first 30 days.
B. Past law
1. Prior to June 30, 1978
Funds used to establish burial contracts entered into on or before June 30, 1978 were held in trust with the person, firm, partnership, association or corporation receiving the funds acting as trustee. Apparently, burial contracts entered into on or before June 30, 1978 could be revocable. Cases with burial contracts established within this time frame should be referred to ARC-MOS for referral to the Office of General Counsel for a legal opinion.
2. July 1, 1978 - December 31, 1995
For contracts established during this time period, a purchaser may enter into more than one contract for prepaid burial services or merchandise. The purchaser may revoke the contract within 30 days of signing whereupon the seller must refund all property used to fund the contract. After the initial 30 days, the seller must deposit all property into an irrevocable trust or escrow account. When a contract is funded with an insurance policy, ownership of the policy must be irrevocably assigned to a trustee.
3. January 1, 1996 - June 30, 1999
For contracts established during this time period, a purchaser may enter into more than one contract for prepaid burial services and merchandise or both. A contract may be revoked up to 30 days after it is signed by the purchaser and seller whereupon the seller must refund all property used to fund the contract. Following that period, all cash paid to the seller must be irrevocably deposited in an irrevocable trust or an escrow account. If a burial contract is funded with an insurance policy, the policy must be irrevocably assigned to a trustee.
A contract entered into after June 30, 1997, should contain a statement indicating that (1) the purchaser may revoke the contract within 30 days after it is signed and that (2) after that 30 days, it is irrevocable. However, a purchaser may make the trust or escrow account immediately irrevocable.
C. Current law
After June 30, 1999, contracts for prepaid burial services and merchandise must specify whether a contract funded with cash is being paid in installments or was paid with a lump sum. Contracts funded with life insurance policies must specify whether the policy was newly issued in connection with the burial contract or whether it was previously issued in a separate and distinct transaction. If a contract is funded by an insurance policy, the ownership of that policy must be irrevocably assigned to a trustee. Upon the expiration of the 30-day period, the seller must deposit the cash or the insurance policy into an irrevocable trust or escrow account. Notwithstanding the initial 30-day period of revocability, a purchaser may elect to have the trust or escrow account immediately irrevocable or to immediately irrevocably assign ownership of the life insurance policy.
The contract must specify that only the purchaser, upon written notice to the seller, may revoke the contract within 30 days after the contract is signed and that the contract becomes irrevocable upon expiration of the 30-day period. The contract must describe the services and merchandise being purchased and whether delivery is unconditionally guaranteed. It must identify the seller, the purchaser and the beneficiary if other than the purchaser (the contract beneficiary is the person upon whose death the burial services and merchandise have been purchased) and it must specify that a purchaser has the unrestricted right to designate one or more successor sellers to whom the contract may be transferred with the consent of the successor seller(s)
Questionable cases should be referred to the RO for review.