§ 1518.5.Funds Maintained In a Preneed Funeral Trust Or Similar Account; Escheat

Preneed funeral trusts let people prepay for their own funeral arrangements long before they are needed, and Section 1518.5 addresses what happens when those funds sit unclaimed and unused. The trust corpus and accrued income, less a capped revocation fee, escheat if the beneficiary or trustor has not corresponded or otherwise shown interest for more than three years after the funds became payable and distributable. That status is triggered by any of several events: the beneficiary reaching or being old enough to have reached 105 years of age, 45 years passing since the preneed agreement was signed, the holder learning of the beneficiary's death or presumed death without providing the contracted funeral services, or, for an installment trust, three years of missed payments with no contact from either the trustor or beneficiary.

The funeral establishment, or the trustee if the establishment itself has dissolved, closed, or lost its license, is treated as the holder, and property held by a trustee for a defunct establishment escheats within six months if unclaimed. Once funds escheat, the funeral establishment is relieved of its obligation to provide the arranged services, though it can recover the escheated funds later by submitting a death certificate and documentation if it ends up providing services anyway. No fee for the search or verification this section requires may be charged directly to the trust, trustor, or beneficiary, though ordinary trust administration costs remain separately allowed, and delivering the funds to whoever is entitled to them, including the Controller, relieves the trustee of further liability.