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N.D.C.C. 43-10.1 - Pre-Need Funeral Services

Pre-Need Funeral Service Contracts

The laws pertaining to pre-need funeral service contracts are administered by the Securities Department.

What is a pre-need funeral service contract?

It is any contract, other than an insurance contract, under which for a specified amount paid in advance in a lump sum or by installments, a person promises, upon the death of the beneficiary named in the contract to furnish professional services or property to be used in funeral services or to furnish cemetery merchandise.

What happens to the consideration paid for the property or services?

Whenever payments are made 100% of the funds paid to a funeral establishment and 50% of the funds paid to a cemetery association must be deposited in a trust company, or a federally insured bank, credit union, or savings and loan association located in North Dakota within days after payment.

How are the funds released from the financial institution?

The funds can be released in two ways. The first way is by the presentation of a certified copy of the certificate of death to the financial institution by the funeral establishment or the cemetery association. The second means is that the funds may be released or transferred by the financial institution to the person who made the payments, before the death of the person for whose benefit the funds were paid. If the funds are released by the second method the financial institution must provide notice to the funeral establishment or cemetery association who deposited the funds.

Is the contract revocable or irrevocable?

Upon written request a purchaser of a contract may make a certain amount of the pre-need funds irrevocable. The irrevocable amount may not exceed the amount of the allowable asset exclusion used for determining eligibility for medical assistance. A purchaser of a pre-need funeral service contract has 45 days from entering the contract to cancel the irrevocable part of the contract by giving notice to the cemetery association or funeral establishment with whom the contract was entered.

Are reports filed with the Securities Department?

On or before January 31st of each year the owner or manager of each cemetery association or licensed funeral establishment that has entered into any contracts during the preceding calendar year must file an annual report covering that calendar year and pay a $15.00 filing fee.

Is it necessary to file a bond?

Each owner or operator of a licensed funeral establishment or cemetery association, who files an annual report, must file a surety bond. The bond is for the use and benefit of the purchasers or persons making payments upon a pre-need funeral service contract or the beneficiary or the beneficiary's estate for damages suffered because of the failure to comply with the provisions of the contract or the provisions of the laws governing pre-need funeral service contracts.

What authority does the Securities Commissioner have?

The Securities Commissioner has statutory authority to bring actions against violators, seek civil penalties, conduct investigations, issue orders deemed necessary or appropriate in the public interest or for the protection of purchasers, and refer evidence for criminal proceedings.

Pre-Need Funeral Services