BY: MARK MILTON, SVP-Institutional Services
(504) 291-8810 mmilton@argentfinancial.com
The death of a loved one is never easy. For family members and close friends, the natural grieving process is compounded by the additional stress of having to quickly plan a funeral that serves as a celebration of their loved one’s life and a fitting goodbye.
Funeral homes and cemeteries handle the delicate work of assisting survivors with the tasks and big decisions that suddenly come after a death, such as deciding on the type of funeral service and selecting and purchasing the necessary items in order to accomplish the proper ceremony for the family and loved ones.
As the funeral business continues to evolve, many funeral homes and cemeteries offer clients the option of prepaid services. Making funeral arrangements in advance can serve several purposes, such as giving the deceased person the peace of mind knowing the details are taken care of and input on the type of funeral service they prefer while also easing the strain on loved ones both emotionally and financially.
These preneed funeral plans can vary greatly depending on a variety of factors but typically cover Preneed funeral (the services which will be provided), Merchandise (specific items used in the service, such as a coffin) and Endowment care (a burial plot and the funds to care for its maintenance).
While each state has their own specific laws and statutes to regulate the funeral industry, when a person prepays for their funeral, the proceeds of that prepaid contract are required to be either deposited into a trust or used to purchase an insurance policy. Again, the state requires annual reporting by the funeral home that specifically shows the value of each contract and how the money has been invested, along with the details of gains or losses over the life of the contract.
That’s where companies like Argent Trust come in. We act as trustee for the trusts established by many funeral homes to handle the administration of those contracts, periodic reporting requirements, investment management of the assets held inside the trust and to ensure that at the time of a contract-holder’s death the assets along with the applicable earnings are transferred accurately and in a timely manner to the funeral home owner.
From the perspective of funeral home owners, establishing a preneed trust is a smart practice that, in essence, creates a built-in revenue stream. The average preneed contract lasts about eight years, during which the assets in the trust can grow significantly.
At Argent, we currently serve funeral and or cemetery clients across 15 states, representing more than $240 million in assets. The size of the preneed trusts we oversee varies considerably, with our clients ranging from individual cemeteries and funeral homes to larger corporate clients.
We have a fiduciary responsibility as trustee, which means we put the interests of our clients ahead of our own. One of the more complicating factors when acting as trustee for preneed funeral contracts is that every state has a different set of rules and it is critical you understand those differences and have the expertise, experience and properly trained professional staff capable of administering those trusts. We excel in navigating the various laws and statutes of every state, and we regularly report to regulatory bodies on behalf of clients. In fact, we have extremely good relationships with many of the state regulators across the country.
From a ‘numbers’ perspective, the funeral industry is a very large and fragmented industry. In 2017 the funeral and cemetery industry generated roughly $20 billion in revenue, but the five largest providers in the U.S. have a combined market share of less than 25%. With changing trends and demographics across the country we believe there will continue to be a fair amount of consolidation.
With our recent acquisition of Independence Trust in Franklin, Tennessee, Argent has positioned itself as a national funeral and cemetery trust provider with a dedicated staff of professionals who know and understand the complexities of funeral and cemetery trusts. We have a long track record of prudent administration of these types of trusts and robust investment management capabilities that are customized to each client’s specific needs. We feel that we’re uniquely qualified in delivering the perfect combination of administrative expertise and compliance within a strict regulatory environment along with investment outcomes consistent with our clients goals and objectives.
