Funeral home has Mom's money. Any suggestions?

I hope this isn't inappropriate to post here. I don't understand why people pay so much for funerals. When my stepdad died 2 1/2 years ago, someone at the NH told me about a cremation company that was very inexpensive. I looked it up, found out that you didn't meet with them and spend hours picking out expensive add-ons. I just filled out all information online. When it was time for them to come pick up the body, it was very professional and respectful. They even brought a flag to drape the body since he was a veteran. It cost about $600.00, extra copies of the death certificate were more. It did take longer to get the ashes back, I just went over to their location and picked them up. It was easy and just what he wanted since it didn't cost so much. He had said, "Just do what costs less." I just did an internet search for "cheap cremation." I will do the same for mom when the time comes.

Just in case you did not see my response to Isabelksdaughter, if this is a Medicaid authorized Trust, then Medicaid should have a copy. I had to prove that the 10k was used for a prepaid funeral.

Contact a lawyer!

If the money is in a genuine trust, it should be protected. If they just said that it was going into the trust, but in fact it was treated as a pre-paid contract and held in another account, then you and mother will be unsecured creditors and may be paid 1c on the $ or not much more. Of course the operators will be in trouble, but then they already are.

A firm of insolvency accountants or lawyers has to be in charge of winding this up, and the state authorities may already be investigating as well. Your best bet is to find out who already is in charge of this and has the answers you need. You will find it difficult or impossible to unravel it yourselves.

In the meantime, there is a thread running about what is actually needed for funerals. A funeral is a church service, and it doesn’t need to be held with an embalmed body in a pricey casket in the church aisle -or even in the church itself. Ashes can come straight from the crematorium and be scattered somewhere meaningful. Family can come to dinner in a restaurant and pay for their own meals. In case you can’t get the money back, think again about an affordable option.

wondering79: Perhaps you should pose this question to an elder law attorney.

A point I need to make is that only a certain amount of money is allowed to be set aside in the Trust. If that money is not entirely used, the balance goes back to Medicaid. My siblings and I had to pay for the flowers and luncheon. I had cashed in an insurance policy that was a little over 10k. The funeral was a little over 11k.

I would explain all this to medicaid and see what they say. Maybe they can help.

I had no idea that the monies paid for pre paid funeral arrangements was often placed in a Trust and assured thereby. What great information Forum gets out to folks. Does anyone have an idea who one should call in a state if a Funeral establishment DOES go bankrupt. Clearly they aren't answering their phone, so how would a person check on their benefits payments, where they are held, and how to get them back?

Sorry I dont know enough to offer advice but others on here sure know their stuff. I just wanted to say that your post answered something I’ve been praying for answers to even as recently as last night. Mom is 96 and I’ve been thinking of pre-planning her funeral 1) to make sure she has them in place when the time comes to take less pressure off of me; 2) spend her money down while she still had some, and 3) get today’s prices vs rising costs. After seeing your post I’m inclined to wait. Although I have not been any help to you, I thank you for pointing out a potential problem that could cause more headache than any of us need at this time. I’m sorry you have to deal with this mess now. Good luck to you in getting your LO’s money returned.

As others have mentioned, funeral homes and prepayment of funeral expenses are regulated by the state, and the rules vary from state to state. I suggest that you check with the applicable state agency in your respective state. Trusts also have specific legal requirements which require that the money be used solely for the designed person(s) identified in the trust. If the funeral home failed to place the funds in a trust, they could be subject to civil penalties and or criminal prosecution. I know that at least in my state the funds are used to acquire an insurance policy which is payable for the sole use of funeral expenses upon the death of the insured.

Just as an aside, I have found that prepayment and preplanning of funerals is one of the best things one can do for survivors. My mother prepaid and planned her own funeral. When she passed, all I had to do was to make sure her wishes were followed (yes, some family members tried to make some changes but that was not happening).

I just looked up Moms Funeral Trust. I wrote a check to "Choices NJ Prepaid Funeral Trust Fund" Its a Irrevocable Trust for SSI, Medicaid and GA purposes only. The Funeral Home has to deposit this money within 10 days.

So, what it is saying is that my State of NJ requires that Funeral Homes are required to deposit prepaid funeral money into a Trust that the State of NJ authorizes. The state is holding the money so it would have nothing to do with a Funeral Home going bankrupt.

I have the Trust Agreement telling how this all works. So what you may want to do is contact the Company that holds the trust.

Additional info:  UCC (Uniform Commercial Code) in PA:

https://www.legis.state.pa.us/cfdocs/legis/LI/consCheck.cfm?txtType=HTM&ttl=13

The statute is extensive; I didn't try to read it.   

This is a better, more concise definition of a UCC filing, and the priorities it creates:

https://www.investopedia.com/terms/u/ucc-1-statement.asp

This summarizes the jist of a UCC:

"A UCC-Uniform Commercial Code-1 statement is a legal notice filed by creditors in an effort to publicly declare their right to seize assets of debtors who default on loans."

If I remember correctly, this is a "priority" of liens.

PS:   you might ask the bankruptcy attorney you hire about the apparent failure to invest the funds in a trust, as well as the concerns about the company's business practices.   I don't know if there would be criminal charges involved, but it's worth the effort.   If you were financially sabotaged, there may be others.  I don't know if there's anything to recover though, although it's not unheard of for "preferential transfers" to be made prior to bankruptcy.  If I recall correctly, that's a federal crime.

Following on Geaton's comments, and first of all:  Whether or not you can recover depends not only on existing/remaining assets (financial and otherwise, including equipment, facility, etc.) in part, but also on whether or not the Ch. 11 prevails, or segues into a Ch. 7.   Since you mention both, I assume you're aware that a Ch. 11 is for a business "arrangement" in bankruptcy, while a Ch. 7 is a direct bankruptcy.

The primary difference is that with a Ch. 11, creditors are identified, remaining assets identified, a Trustee is appointed, and attempts are made to identify lower, partial payments to the creditors.  The business continues, albeit as a less wealthy business than before the Ch. 11.    As an individual, I'm not sure where you would stand. 

I'm less familiar with the interests created by filing of a UCC-1, a statement executed by the debtor and filed on execution of various events of indebtedness (mortgaging the equipment, etc.) which identifies the chattel subject to it, and the secured interest of the lender.    It's been too long since I've worked with USS statements to opine on how that secured interest would factor into the assessments made by the Trustee.

A Ch. 7 is a direct dissolution. in the sense of resolving and disposing of all the assets and concluding the business as a viable entity.     This is a good, brief explanation of the differences between a Ch. 11 and a Ch. 7.

https://www.diffen.com/difference/Chapter_11_Bankruptcy_vs_Chapter_7_Bankruptcy

I don't know though, w/o researching all the qualifications for each, and which might prevail.

So as to your concern that the amount of the debt could force the company from a Ch. 11 to a Ch. 7 might be a valid issue.   I've never worked on a Ch. 7, only Ch. 11s.   A Ch.  11 can segue into a Ch. 7 if there are no funds to even allocate among the debtors.

And given that this was decades ago, I'm not sure how either is handled today.  I do recall though that there was a mandatory period in which debtors had to file in order to be considered as claimants.   This is a good reason to find a bankruptcy attorney ASAP.

The absolute best thing you can do right now is to aggregate all the supporting data you have for the debt, and contact a law firm which handles Ch. 11s on behalf of debtors.

I believe you are correct that there's no way to remove the funds; once the Ch. 11 or 7 is filed and a Trustee appointed, all funds are subject to his or her control, through the court.

I'm assuming that the Ch. 11 was filed in a Philly federal district court?

Good luck; this must be very frustrating, so I hope you're able to quickly find a bankruptcy attorney to help you.

(If you want suggestions on finding a good bankruptcy attorney, just post again to that effect.)

Likely they are bankrupt.
You join the line of a huge number of creditors who are owed money.
It is very unlikely that you will receive this money back, as there is now no money to give you.
I am very sorry but you do bring up an excellent point to those choosing to prepay funeral costs.

Check with your state agency that regulates funeral homes. There is probably a state law that is there to provide protection to the consumer when a company becomes insolvent.

You need to make sure your mom is officially listed as one of the creditors. I'm not sure the procedure (because it may vary by state) but consulting with an attorney experienced in this would be worth the investment.

i was a guardian for an aunt in 2015. Using her money, i prepaid her cremation and funeral expenses. Like u, i was told the money is placed in a trust that is transferable and can be used at a different funeral home if the situation changes. At a minimum, talk to a lawyer. How much money are u talking about?
visit the funeral home in person and get that paperwork.