Funeral Arts National Board Practice Exam

What can NOT be done with the funds paid for a preplanned funeral?

1. Deposited into an irrevocable account

2. Invested in a stock market

3. Deposited into the funeral home's bank account

4. Used to cover inflation in pricing

The correct answer is: Deposited into the funeral home's bank account

Funds paid for a preplanned funeral are often subject to specific regulations and guidelines aimed at protecting consumers and ensuring that the funds are used for their intended purpose—covering the costs of the funeral at the time of need. When these funds are deposited into a funeral home's bank account, they may not be safeguarded in the same way as funds that are placed into an irrevocable account or invested appropriately. Depositing the funds directly into the funeral home's bank account could allow those funds to be used for other operational expenses of the funeral home, which raises concerns about whether the money will be available when needed for the preplanned service. Irrevocable accounts are often set up specifically to prevent the funds from being accessed by anyone other than the designated funeral home when the services are required. Similarly, investments in the stock market carry risks that can affect the original amount paid, and inflation adjustments are typically built into carefully managed preplanning agreements. Therefore, while the other options ensure that the funds are preserved for their intended funeral services, depositing the funds directly into the funeral home's bank account does not provide the same level of protection and assurance that the funds will be available for the planned funeral when the time comes.