Pre-need funeral contract trust

These trusts sit behind customer contracts that are paid for but not yet performed, so a buyer of a funeral home or cemetery should ask where each contract’s funds sit and who holds them.

What Ontario requires

Section 52(1) says money received in advance for licensed supplies or services shall be held in trust if the regulations require it, and a licensee must pay it into a trust account within the prescribed time (s. 52(4)). It shall not be paid out except in accordance with the regulations (s. 52(5)). Section 52 is subject to exceptions and transitional rules in s. 52(3) and (6) to (11). The Bereavement Authority of Ontario says customers may have prepaid money held in trust by a bank, trust company or independent trustee, or buy insurance, and that providers are required by law to choose only safe investments for prepaid trust funds.

What to ask

• Which contracts are funded by trust and which by insurance.
• Whether trust balances reconcile with the contract records.
• What the regulator expects at closing, since a licence under the Act is not transferable (s. 14(2)).

See how to buy a funeral home in Ontario and funeral establishment licence.