Pre-planning Frequently Asked Questions
PRICE GUARANTEED AGREEMENTS:
Thomas L. Neilan & Sons Funeral Home does offer a price guarantee for the services and merchandise of your pre-need funeral selections only when they are paid in full. The funds that you pay to us today will be deposited in your name into a trust that will earn interest. Interest earned on funds that you have set aside today to pay for items which are price guaranteed on the day of your service will be paid to our funeral home in order to help offset the inevitable increase in prices caused by inflation.
Cash advance items in your selection are items that are rendered by outside providers. As a matter of convenience and courtesy, we pay those providers and add their charges to your bill. We do not have any control over their costs. These items we cannot guarantee. Funds that you set aside today for these items will also be placed in the trust and earn interest. At the time of the funeral we tally the costs of the cash advances and compare to the amount in the trust to the current cost of those items. If there is an excess of funds, the overage monies belong to your estate. If there is a shortage than your representative will be asked to pay the difference or to change selections of your funeral in order to recoup the cost.
Q: Who is the Escrow Agent or Trustee?
A: First State Trust Company (formerly Citigroup Institutional Trust) with Citigroup serving as Trustee to funds placed in the Cooperative Funeral Fund (CFF) Inc. system. Citigroup is a significant owner of Morgan Stanley Smith Barney, the largest investment brokerage firm in the world, which has trust powers and locations in all 50 states.
Q: What is the difference between Escrow Agent and Trustee?
A: Certain state laws use the language “Escrow” while others “Trust” for pre-arrangement contracts. For our purposes, both are treated the same. An escrow account is a deposit or fund held in trust or as a security. A trustee is responsible for holding and dispersing the funds.
Q: Who is the investment advisor?
A: Cooperative Funeral Fund (CFF) Inc.
74 Boston Post Rd.
Madison CT, 06443
Phone: (800) 336-1102
Fax: (800) 340-0000
Q: What is the investment advisor’s role?
A: Cooperative Funeral Fund directs the Escrow Agent/Trustee to purchase United States Treasury Bonds that are backed by the full faith and credit of the United States. These bonds are purchased through Morgan Stanley Smith Barney at the direction of Cooperative Funeral Fund’s President Mark Mannix, who is registered with the SEC, Securities and Exchange Commission.
Q: How can I check on the money balances? Who do I call?
A: Cooperative Funeral Fund is responsible for accounting and claim information. Please contact them at (800) 336-1102.
Q: Who invests, administers and maintains the funds? How are the US Treasury bonds purchased? What is the company’s contact information?
Cooperative Funeral Fund (CFF) Inc. directs First State Trust Company (formerly Citigroup Institutional Trust Company) to purchase certain US Treasury Bonds which are predetermined during meetings between Mark Mannix, CFF’s President, and individuals at Morgan Stanley Smith Barney. First State Trust maintains all Treasury Bonds in the trust account. As plan Administrator, CFF manages all of the sub-accounting for funeral homes and individual accounts. Cooperative Funeral Fund (CFF) Inc. is the investment advisor. CFF also administers and maintains the funds.
Cooperative Funeral Fund (CFF) Inc.
74 Boston Post Rd.
Madison CT, 06443
Phone: (800) 336-1102 Phone
Fax: (800) 340-0000 Fax
Q: How will I know that the funds have been deposited by the funeral home?
When the funeral home sends your money to Cooperative Funeral Fund, Inc (CFF), CFF in turn sends a letter notifying you and the funeral home of the funds deposit and account activation. You will receive this notification within 7-10 business days. CFF will then send you an annual tax document regarding interest on the account.
Q: Are there tax issues with the trust?
A: Yes, taxes are due on income generated from the interest earned on the trust account. The IRS has determined that these trust funds are yours until the funeral home provides the funeral services and merchandise selected. Because you are the beneficiary, you are responsible for any taxes due on the income earned on your trust. Cooperative Funeral Fund, Inc. will prepare and send you all of the necessary tax forms required by the IRS. Each January you will receive an IRS form 1041 Schedule K-1 from the trust administrators. The K-1 will reflect the amount of interest your trust has earned during the previous year. If your income requires you to file a return with the Internal Revenue Service, you should include this income on your return. However, many of our clients are not in an income bracket that necessitates paying taxes.
* If you select to make your trust “Irrevocable” that only means that the funds can only be released from the trust to pay for your funeral. It does not affect your taxation status.
Q: Can I cancel a revocable funeral service contract? If so, what are the repercussions?
A: Yes. A revocable account can be canceled or transferred at any time. The funeral home has an optional administrative fee that varies by state.
Q: Is the money placed in the trust secure?
A: Absolutely. All funds placed in the trust are invested in financial instruments, which are guaranteed by the Federal Deposit Insurance Corporation (FDIC) or directly by the United States Government (U.S. Treasury Bonds).
Q: Where are the funds deposited?
A: The money you give to the funeral home is placed in a depository account at either Bank of America or Wachovia National Bank, dependent upon the state in which you are located. Under the direction of the Trust Officer, the funds are periodically swept into First State Trust Company with Citigroup as co-trustee. Cooperative Funeral Fund, inc (CFF) is responsible for accounting and claims and will provide you with an annual statement of your accounts earnings. You may contact them at any time for your account balance.