{"id":11123,"date":"2018-09-10T20:36:31","date_gmt":"2018-09-10T20:36:31","guid":{"rendered":"https:\/\/hammerle.com\/?p=11123"},"modified":"2025-06-18T17:33:21","modified_gmt":"2025-06-18T22:33:21","slug":"buying-prepaid-funeral-contract","status":"publish","type":"post","link":"https:\/\/hammerle.com\/legaltalk\/legal-talk\/buying-prepaid-funeral-contract\/","title":{"rendered":"Funeral planning is helpful. Buying a prepaid funeral contract – not so much."},"content":{"rendered":"

That is because there is a huge potential for being scammed in the process.<\/h3>\n

In one example, a company called National Prearranged Services, Inc. (NPS) victimized 97,000 people and numerous funeral homes in 16 states when it ran a Ponzi-like scheme on prearranged funeral contracts.<\/p>\n

Six people were sentenced to federal prison in 2013 for their role in the scam, which ran for over 25 years. https:\/\/www.fbi.gov\/news\/stories\/prepaid-funeral-scam<\/a><\/p>\n

Are all prepaid funeral contracts merely a fraud?<\/h3>\n

No, but you definitely need to do your due diligence before entering into one.<\/p>\n

The Federal Trade Commission and the Texas Department of Banking regulate prepaid funeral contracts that are sold in Texas.\u00a0 There is a website devoted to educating consumers about the contracts:\u00a0 http:\/\/www.prepaidfunerals.texas.gov\/<\/a><\/p>\n

A prepaid funeral contract is for merchandise and services sold, on a prepaid basis, directly to the public for use in connection with funeral services.\u00a0\u00a0 Any funeral home or cemetery that sells the contract in Texas must either have a trust-funded or insurance-funded permit issued by the Texas Department of Banking or sell through a licensed third-party insurance-funded permit holder.<\/p>\n

Here is how it is supposed to work:<\/h2>\n

You agree to buy goods and services for your funeral.\u00a0 You pay in full, through an installment plan, or by means of a life insurance policy or annuity that you purchase.\u00a0 If the seller receives funds during your lifetime, then those are put into a trust account or restricted bank account.\u00a0 If the seller receives funds through an insurance policy or annuity, then the insurance company pays the seller the contract price upon your death.<\/p>\n

NPS scammed its clients by not putting all of the customer funds into a trust or life insurance policy, altering application documents, and wrongfully using the money for risky investments, existing funeral claims and personal enrichment.<\/p>\n

So how do you avoid being a victim?<\/h3>\n

Check out the seller with the BBB and on-line research.\u00a0 Compare the seller\u2019s contract with the model contract on the Texas Department of Banking website. https:\/\/www.dob.texas.gov\/cemetery-prepaid-funeral-services<\/a>.<\/p>\n

Look up the permit number for the Seller (this is required to be in the contract) on the DOB website.<\/p>\n

The contract should describe, in detail, what you are buying.\u00a0 If you are buying merchandise, then the contract must state the type of material predominately used in the construction (for a casket, urn or outer-burial container), the type of sealing feature (for a casket or outer-burial container) and the material lining the interior (for a casket).\u00a0 At your option, you can require additional descriptions, such as model number or color.\u00a0 If you are buying services, then make sure those are described.<\/p>\n

Determine if you can cancel or transfer the contract.<\/h3>\n

Sign the Texas form for Appointment for Disposition of Remains, and give your agent a copy of everything, including your research.<\/p>\n

If a permitted seller or provider defaults on the contract, the applicable Prepaid Funeral Guaranty Fund guarantees performance of the contract.<\/p>\n

Virginia Hammerle is President of Hammerle Morris Law Firm and is a 1982 graduate of Southern Methodist University Dedman School of Law.\u00a0 Sign up for her newsletter at<\/em> legaltalktexas@hammerle.com<\/a>. \u00a0 This article does not constitute legal advice.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

That is because there is a huge potential for being scammed in the process. In one example, a company called National Prearranged Services, Inc. (NPS) victimized 97,000 people and numerous funeral homes in 16 states when it ran a Ponzi-like scheme on prearranged funeral contracts. Six people were sentenced to federal prison in 2013 for […]<\/p>\n","protected":false},"author":5,"featured_media":11769,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[21],"tags":[],"class_list":{"0":"post-11123","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-legal-talk"},"yoast_head":"\nAvoid Buying Prepaid Funeral Contract | Hammerle Morris Law Firm<\/title>\n<meta name=\"description\" content=\"A prepaid funeral contract is for merchandise and services sold, on a prepaid basis, directly to the public for use in connection with funeral services.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/hammerle.com\/legaltalk\/legal-talk\/buying-prepaid-funeral-contract\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Avoid Buying Prepaid Funeral Contract | Hammerle Morris Law Firm\" \/>\n<meta property=\"og:description\" content=\"A prepaid funeral contract is for merchandise and services sold, on a prepaid basis, directly to the public for use in connection with funeral services.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/hammerle.com\/legaltalk\/legal-talk\/buying-prepaid-funeral-contract\/\" \/>\n<meta property=\"og:site_name\" content=\"Hammerle Morris Law Firm\" \/>\n<meta property=\"article:published_time\" content=\"2018-09-10T20:36:31+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-06-18T22:33:21+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/hammerle.com\/legaltalk\/wp-content\/uploads\/sites\/2\/2018\/09\/24141124_m.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Virginia Hammerle\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Virginia Hammerle\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/hammerle.com\\\/legaltalk\\\/legal-talk\\\/buying-prepaid-funeral-contract\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/hammerle.com\\\/legaltalk\\\/legal-talk\\\/buying-prepaid-funeral-contract\\\/\"},\"author\":{\"name\":\"Virginia Hammerle\",\"@id\":\"https:\\\/\\\/hammerle.com\\\/legaltalk\\\/#\\\/schema\\\/person\\\/3a35dce360aad1cd9da53574c3c1a6bd\"},\"headline\":\"Funeral planning is helpful. 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