PreArrangement Subpage

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PreArrangements - Trust Funds

Ocean Grove Memorial Home
118 Main Avenue, Ocean Grove, New Jersey 07756

Thomas J. Saragusa, Manager
N. J. License No. 4036

VOICE 732-775-0434 - - OGMHognj@aol.com

Trust Funds
The New Jersey Prepaid Funeral Trust Fund™

One way to fund a prearranged funeral is through the New Jersey Prepaid Funeral Trust Fund™. The NJPFTF is managed in cooperation with one of New Jersey’s largest banking institutions and the funds are fully insured by the Federal Deposit Insurance Corporation (FDIC). By New Jersey Law, Revocable Trusts, are 100% refundable to the purchaser, with interest and without penalty.

The Ocean Grove Memorial Home can open a New Jersey Prepaid Funeral Trust Fund™ account for you.

If a trust fund is used, 100% of the principal and interest must accrue to the benefit of the depositor (less a trustee’s fee of a maximum of 1% of the corpus of the account, annually) and must be deposited in an FDIC insured bank account. Except for special cases (as noted below), trust fund moneys are revocable, i.e., 100% refundable on demand, with interest. You may change the selected funeral services or merchandise at any time without penalty. (Irrevocable trust accounts for SSI/Medicaid recipients are non-refundable.)

How Does It Work?
You meet with the funeral director, select the funeral goods and services you desire, and complete necessary paperwork. The funeral director then forwards the completed trust fund paperwork, along with your check to the trust fund office. Your check is immediately deposited by the NJPFTF and an acknowledgement of receipt is forwarded to the funeral home, acting as your trustee, the following business day. Your money is NOT deposited in the operating account of the funeral home.

Each year the funeral home sends you an annual summary statement of your account’s principal and the interest earned during the past year, together with the Internal Revenue Service-required Grantor Letter for tax reporting. You are required to consider the interest earned on this account as income to you.

The interest received by the Trust Fund will vary with money market rates, and the NJPFTF will retain an administrative fee each year (not to exceed 1% of the corpus of the trusted funds). It will place all the remaining interest in your account for your benefit.

Other benefits of using the NJPFTF:
Opening a New Jersey Prepaid Funeral Trust Fund™ account offers these important benefits:

It is totally revocable (refundable), with interest.

It grows from the day of deposit and is FDIC insured.

Its rates are competitive and its payment options are flexible. The NJPFTF interest rates are above average, even during economically depressed times.

There is NO age limit, and NO health questions are asked.

Unlike traditional savings accounts which may close or become inaccessible at the time of death, this account becomes payable at the time of death, directly to the funeral home. All excess funds remaining after the funeral expenses have been paid must be paid to your estate (except in the case of irrevocable trust accounts, the excess from which is paid to the State of New Jersey).

Trusts are available for SSI, Medicaid and General Assistance applicants and meets all SSI/Medicaid and General Assistance requirements. Irrevocable trust accounts for SSI/Medicaid recipients are NOT REFUNDABLE in cash but the funeral arrangement associated with each account may be changed at any time. Excess funds remaining after the funeral expenses have been paid must be paid to the State of New Jersey if the Medicaid recipient was actually receiving Medicaid benefits at the time of his death.

More than $235,000,000.00 in consumer funds have been paid into the NJPFTF (as of November 2003).

The NJPFTF serves only New Jersey Funeral Homes.

Refundability
There are two kinds of prepaid trust accounts: revocable and irrevocable. Revocable trusts must be refunded upon demand of the depositor at any time during the life of the depositor. In additon to being able to revoke the trust, you may change the selected funeral services or merchandise at any time without penalty.

Only individuals attempting to qualify for SSI, Medicaid, or General Assistance may establish irrevocable trust funds, which must be used for funeral and burial purposes. Irrevocable arrangements cannot, by law, be cancelled or refunded.

In New Jersey, all SSI/Medicaid accounts opened specifically for the purpose of funding a funeral are irrevocable, meaning NOT REFUNDABLE IN CASH and are held during the lifetime of the depositor to be used for funeral expenses. Legislation has been enacted regarding irrevocable funeral trusts and insurance policies specifically purchased to fund a funeral. This legislation says that, once all funeral expenses have been paid, any moneys remaining in:

Irrevocable trust accounts opened on or after February 27, 2000

or in

Newly issued insurance policies that have been purchased on or after February 27, 2000 and that are irrevocably assigned

will be forwarded directly to the state if the recipient was receiving benefits at the time of his death.

(Irrevocable trust funds opened or insurance policies purchased prior to February 27, 2000 are not affected by this legislation.)

Only licensed New Jersey funeral directors through registered funeral homes may offer prepaid funeral plans like Funeral Planning CHOICES™.

Guaranteed and Non-Guaranteed Arrangements
Funeral directors, at their option may guarantee or not guarantee that the money prepaid for funeral goods and services at the time prearrangements are made will be sufficient to pay for those services at the future time of death.

If the funeral director does not guarantee that prepaid moneys will cover future costs, the prepaid funds along with accrued interest then available will be used to pay future costs at the time death occurs. If too much money has accrued in the trust account, all excess amounts must be returned to the payor or the estate of the intended funeral recipient. If too little money exists at the time of death, the person who controls the final disposition or the estate of the decedent becomes responsible to pay the balance...or change the arrangements.

If the funeral director does guarantee that prepaid monies will cover future costs, it is important to determine whether or not third party expenses (cash advances) are covered by his guarantee. The funeral director must disclose whether the agreement is guaranteed or not guaranteed at the time of the signing of the funeral agreement.

The Ocean Grove Memorial Home does not guarantee prepaid funeral agreements.

Consumers who choose to pay for their funerals through funeral trusts, may select a “pooled” trust account which is managed by a trustee. The account must be established in the consumer’s name. The funds in the account may only be paid to the funeral home when the intended funeral recipient has died. The N. J. State Funeral Directors Association maintains and oversees the (pooled) N. J. Prepaid Funeral Trust Fund.

There are steps you can take to make sure your preneed funds are safe.

Call the New Jersey State Funeral Directors' Association where the trust account has been opened to verify that your preneed money has been deposited (732-974-9444). Give a reasonable amount of time for the paperwork to clear.

Ask to see the funeral director’s license and note his number then visit the N. J. Board of Mortuary Science’s Web Site and check the funeral director’s record.

Make sure you receive at least one statement each year detailing the status of your account and the amount of interest your account has earned and what amount has accumulated. (Pooled trust accounts with more than 200 depositors may charge a commission.)

If you have a qualifying existing life insurance policy and are faced with the consideration of applying for SSI or Medicaid, you may be able to protect the values of those policies through the Sure Trust™ Program, administered by the N. J. State Funeral Directors' Association...a sister program to the NJPFTF. To cash in valuable paid-up whole life insurance policies in order to qualify for SSI or Medicaid should be your LAST resort. Click below and learn about Sure Trust™.

Commentary by Bud Noakes in Mortuary Management Magazine.

Links to SECONDARY PAGES in this Master PreArrangement Partition:

Sure Trust - Organ Donation - FAQuestions - Philosophy - PrePayment - SSI/Medicaid

Back to the PreArrangements MASTER Page

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