Know Your Rights When Entering a Pre-Need Contract
Planning ahead for funeral services can provide peace of mind and reduce stress for loved ones. However, understanding your rights when entering a pre-need contract is essential to protect yourself and your finances. This guide simplifies key aspects of the Alberta Funeral Services Act and its associated regulations, ensuring you can make informed decisions without navigating complex legal jargon.
What is a Pre-Need Contract?
A pre-need contract involves paying for funeral services, such as embalming or hosting a funeral, in full or in part before the client (the person the services are for) passes away. Several key terms to know:
Your Rights Under a Pre-Need Contract
1. Right to Cancel
2. Administration Fees
3. Money Held in Trust
4. Reporting Requirements
5. Consumer Protections Against Unfair Practices
It is illegal for funeral services providers to:
Additional Key Provisions
Planning ahead for funeral services can provide peace of mind and reduce stress for loved ones. However, understanding your rights when entering a pre-need contract is essential to protect yourself and your finances. This guide simplifies key aspects of the Alberta Funeral Services Act and its associated regulations, ensuring you can make informed decisions without navigating complex legal jargon.
What is a Pre-Need Contract?
A pre-need contract involves paying for funeral services, such as embalming or hosting a funeral, in full or in part before the client (the person the services are for) passes away. Several key terms to know:
- Client: The individual for whom funeral services are being arranged.
- Payor: The person who pays for the contract; this may be the client, a relative, or a trustee.
- Licensee: A licensed individual or business providing funeral services, such as a funeral home or crematorium.
- Trust: Funds held securely for the contracted services.
- Trustee: Manages the trust funds and ensures they are used according to the contract.
Your Rights Under a Pre-Need Contract
1. Right to Cancel
- You can cancel a pre-need contract at any time, for any reason.
- Cancelling within 30 days of receiving the contract copy allows a full refund, with no penalties.
- After 30 days, a licensee may charge a maximum administration fee of 15%.
- Contracts must clearly state your right to cancel; any clauses to the contrary are not legally binding.
2. Administration Fees
- If cancelled after 30 days, the business may deduct 15% of the total cost or the money held in trust as an admin fee.
- The business must disclose upfront which fee structure applies.
3. Money Held in Trust
- Funds paid under a pre-need contract must be held in trust by the licensee until services are provided or the money is refunded.
- After the 30-day cancellation period, funds must be transferred to an authorized trustee within five business days.
- Unused funds in trust cannot be seized in legal proceedings.
4. Reporting Requirements
- Trustees must provide a statement of account for the pre-need contract trust fund upon request by the payor or client.
5. Consumer Protections Against Unfair Practices
It is illegal for funeral services providers to:
- Exploit someone who does not fully understand the contract.
- Pressure individuals into contracts they likely cannot afford.
- Misrepresent services as legally required.
- Make false claims or misleading statements.
Additional Key Provisions
- Cold Calling Prohibited: Funeral providers cannot solicit pre-need services through unrequested direct contact.
- Unclaimed Trust Funds: Funds become unclaimed if the client is unreachable or presumed deceased after age 120, and services were not provided. These funds are managed by the Minister and held for two years before claims are void.
What CMS Recommends
Before signing a pre-need contract:
The Cooperative Memorial Society (CMS) is committed to helping its members navigate the complexities of pre-need contracts with confidence. For more information or assistance, reach out to us at [email protected]. Planning ahead doesn’t have to be complicated—know your rights and make choices that reflect your values and wishes.
Before signing a pre-need contract:
- Understand Your Rights: Ensure the contract is clear about cancellation policies, fees, and trust fund management.
- Request Transparency: Ask for an itemized statement and clarify how your funds will be handled.
- Seek Guidance: If you feel pressured or unsure, consult a trusted advisor or contact CMS for support.
The Cooperative Memorial Society (CMS) is committed to helping its members navigate the complexities of pre-need contracts with confidence. For more information or assistance, reach out to us at [email protected]. Planning ahead doesn’t have to be complicated—know your rights and make choices that reflect your values and wishes.
