The number of consumers that select cremation continues to increase. The National Funeral Directors Association reports that the national average for 2015 is expected to be 48.2% and in 2020 is predicted to reach 55.8%. The Cremation Association of North America (CANA) continues to report the number of consumers that select cremation will continue to increase.

  CANA summarized the reasons for the increase derived from consumer surveys as:

1.      Cost;

2.      Range of Options for disposition of the cremated remains versus traditional burial;

3.      Environmental considerations and impact;

4.      Geography and transient nature of the population; and

5.      The increase of religious acceptance of cremation.

  The increase in the selection by consumers of cremation services has resulted in refocused marketing programs by progressive members of the industry. A major portion of these marketing programs involves pre-need sales of cremation services and merchandise. The intent is to direct the future market increases towards these industry members. Pre-need sales are probably at a higher price level since the seller will have a better opportunity to explain the various options.

  One legal area of concern is the trusting requirements for preneed sales of cremation merchandise and services. The trust laws of the various states are not consistent. Some state laws treat the sales proceeds from pre-need cremation services and merchandise under the pre-need funeral sales laws. Other state laws treat the sales proceeds from pre-need cremation services and merchandise under the pre-need cemetery sales laws. The trusting amount and refund provisions can vary tremendously depending on the pre-need sales law that applies.

  For example, the pre-need sale of cremation services and merchandise in Illinois is covered under the Illinois Pre-need Cemetery Sales Act (Sales Act). Section 815 ILCS 390/4 (E) of the Sales Act provides the definition of “Cemetery Services” to include the “services customarily performed by…crematory personnel…in connection with the…cremation of a dead human body.” Cemetery merchandise includes a columbarium and niches. Urns and urn vaults by implication are included.

  Section 815 ILCS 390/15 (a) of the Sales Act provides for the trusting of 50% of all of the proceeds from the sale of covered services and merchandise except for any amounts attributable to sales taxes or credit life insurance premiums. The consumer under the Illinois law has limited rights to cancel a contract and obtain a refund. If the provider does not perform the purchaser, beneficiary or the purchaser’s survivors has the right to a refund of the sales price and any interest earned on the amount deposited in the trust fund. The purchaser or a beneficiary, after a sales contract has been fully funded, may cancel the contract and receive a refund of the amount in the trust fund plus any undistributed earnings on that amount.

  If a sale is covered under a funeral pre-need sales law in a state the trusting requirement is customarily 100% of the sales proceeds for the cremation services and merchandise sold on a pre-need basis. In addition, the purchaser typically has the right to cancel at any time and to receive a refund to the total amount paid, plus any earnings from the trust fund. Obviously, all subscribers should check the laws in the states where they operate in order to make sure they are in compliance.

  This article is for the information of subscribers and does not constitute legal advice. All subscribers should accordingly consult with their own attorney to make sure they are in compliance with the legal requirements for their own companies in the states where they operate.