Carol Lespreance doesn’t trust the funeral industry.
Twice in the past seven years she’s discovered that the funeral she planned and paid for is not the one she will be getting.
Carol and her husband, Alfred, made funeral arrangements in early 1993, picking out caskets and selecting memorial cards at an established Lincoln funeral home. Lespreance, a retired social worker, used her retirement money to prepay the plans.
She paid for Alfred’s funeral through what is called a trust and for her own with a life insurance policy purchased through the funeral home.
In 2007, when the couple decided to switch to a different funeral home, they discovered that Alfred’s prepaid trust no longer would pay for the funeral they wanted and that the new funeral home of their choice was not required to honor the previous contract.
Alfred's prepaid trust had lost money.
Under state law, funeral homes can keep 15 percent of the trust amount off the top. Over the years, plans have to be credited only with interest earnings matching the consumer price index. However, the plans take all investment losses.
So funeral homes selling the trusts can get 15 percent of the original amount, plus extra income during high interest-earning years, but doesn’t have to worry about the losses.
The Lespreances' trust account lost $274.63 between 1993 and 2006.
Roper & Sons Funeral Home eventually increased the value of the trust, even though it had no legal obligation to do so, allowing the Lespreances to pay for a somewhat comparable funeral at Wyuka.
After her husband died in June 2014, Carol Lespreance took another look at her own funeral plans. She discovered the life insurance company had changed names but the policy’s death benefit had changed very little.
She learned the policy had grown just a few hundred dollars, and the $5,475 benefit would not pay for the funeral she had planned.
Lespreance said she had a verbal commitment from a Wyuka employee, obtained when she transferred the insurance policy there, that the insurance policy would cover the funeral she wanted.
However, she has no signature from the employee, no specific contract with Wyuka and the employee no longer works there.
So once again, Lespreance has been filing complaints with the state Department of Insurance and the state Attorney General’s office.
And once again, the answer is the same: It might not seem fair, but the funeral industry has broken no state laws.
Nebraska is in the middle of states as far as protecting consumers, says Josh Slocum, executive director of the Funeral Consumers Alliance, who has studied the laws of all 50 states. The alliance is a nonprofit dedicated to protecting consumers' rights.
New York offers consumers the best protection, including requiring funeral homes to deposit 100 percent of the prepaid money in fully refundable, interest-bearing accounts, he said. Florida has the worst protection, Slocum said.
In Nebraska, problems occur when people want to switch funeral homes. The funeral homes that sold the trust or life insurance policy must honor the contracts, even if a prepayment doesn’t cover all of the costs. But another funeral home isn't bound by that contract.
Carol Lespreance has been trying to get Wyuka to honor her original plan. She is getting the gun-metal gray coffin with light blue lining that she wants, but Wyuka wants another $335 for opening and closing the gravesite.
Wyuka President Mike Williams said the funeral home is honoring her original plans, even providing the more expensive casket to ease Lespreance's concern.
"I just want her to not worry about it," he said.
As a social worker, Carol Lespreance had heard plenty of stories about funerals. A client would find out a funeral for a parent was going to cost $6,000 and they couldn’t pay for it, for example.
Her boss always said, “They should have gotten a prepaid funeral.”
So she did.
Now she thinks paying for anything more than a headstone and cemetery plot is not a good idea.
"What I did I did in good faith," she says of prepaying the funeral costs. Now she finds the money doesn't buy what she wanted.
"Who is going to pay these extra costs?" she asks.
Most experts recommend that people who know they will get help from Medicaid and are certain they will not move to another town before they die should prepay their funeral expenses.
These funds can be exempted from the rules that require seniors to spend down their assets in order to get the medical assistance, said Houston Doan, with the city's Aging Partners.
"You know you have the money to get buried and the government leaves it alone.”
Many experts also recommend making funeral plans ahead of time, but whether to prepay is another question.
"At the minimum, I really do think people who are retired or near retirement should be thinking realistically about preplanning a funeral," Doan said, adding that doing so is a service to one's family.
About 40 percent of funerals in Nebraska are pre-arranged, said William Lauber, government relations chairman for the Nebraska Funeral Directors Association.
Not all of them are prepaid, he said.
"The problem with prepaying is that our society is so darn mobile," said Doan.
If a person switches funeral homes or dies elsewhere, problems can occur, he said.
In Slocum's opinion, prepaying unless one is going on Medicaid immediately is a “terrible idea."
"It is not a good investment anywhere in the country," he said. "I caution consumers not to be misled by funeral homes that suggest prepaying just in case you end up using Medicaid.”
In general, Slocum calls laws covering funeral prepayment plans “state-sanctioned robbery.” That includes laws in Nebraska and about 20 states covering trust funds where funeral homes can keep 15 percent up front, he said.
“If you change your mind, you are out the 15 percent.
In Nebraska many funeral homes, particularly in rural areas, do not take the 15 percent and simply put the money in a bank certificate of deposit, according to Lauber.
And many funeral homes now use life insurance policies to prepay funeral plans, rather than the trust accounts.
But Slocum says in most cases, a person will end up spending as much or more in premiums as the insurance will pay out.
Insurance is a service for customers, according to Lauber, who owns a Milford funeral home.
About 75 percent of the insurance purchased for funeral plans is a single premium. Because of the consumer's age, the single premium can be high, but not higher than the death benefit.
People can pay more than the face value of the insurance policy when they pay multiple premiums over several years, he said, comparing it to paying interest on something purchased on credit.
Slocum argues that the idea of a prepaid funeral is unrealistic.
“The idea we can take care of everything so the kids don’t have to worry, it’s magical thinking. It is not true.”
Nebraska law didn't change in the seven years since Carol Lespreance publicly raised the issue about prepaid trusts, but more funeral homes are using insurance policies to prepay plans rather than trusts, according to several industry sources.
The Legislature's Banking, Commerce and Insurance Committee did discuss the trust fund issue and the ability of funeral homes to keep the 15 percent after seeing Lespreance’s complaints but made no changes in state law, according to a veteran legislative staff member.
They were told that funeral homes had to honor contracts even if there wasn’t enough money in a given trust fund and that problems occurred only when people wanted to change funeral homes or didn’t die in their hometown.