A woman in Richmond, Virginia prepaid over $6,600 for preneed funeral services, which were to include the visitation, chapel, limo, and her burial plot. In a very unfortunate turn of events, the funeral home went out of business when the owner passed away without a designated licensee. More unfortunately, the woman has been unsuccessful in obtaining a refund from the widow or the decedent owner’s estate. This begs the question: can a funeral home in Virginia legally take prepayments for funeral services and put these payments towards other needs, like general operating costs?
Legally, no. Virginia Code § 54.1-2822(A) states that funds received under preneed contracts, unless towards an insurance policy or annuity contract, are to be deposited “in a special account in a bank or savings institution doing business” in Virginia. Further, such funds must be “deposited in separate, identifiable trust accounts setting forth the names of the depositor, the trustee for the person who is the subject of the contract, the name of the person who will render the funeral services and the name of the person who is the subject of the contract.” Va. Code § 54.1-2822(B). Additionally, how the funds are to be held – in trust, insurance, or annuity – needs to be disclosed in the preneed contract. See Virginia Code § 54.1-2820(A)(5), (C). Therefore, the reporters of the situation are correct when they state that this woman’s only remedy may be in the civil courts. If the contract does not state how her funds were to be held, and if the funds weren’t properly deposited and held, the funeral home has broken Virginia law.