Dear Counselor

The Missouri funeral home I purchased has a block of NPS preneed contracts. The prior owner rolled over to NPS his joint account contracts and kept 20%. Can I sue the bank that surrendered the joint accounts?

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R.S.Mo. §436.053 governs preneed contracts that are funded with joint bank accounts. The law sets out the requirements of the agreement between the funeral home and the purchaser, and contemplates that the parties will have joint control over the account. The funeral home, not the bank, has the responsibility for ensuring compliance with §436.053. The prior owner may have violated Chapter 436 if he/she terminated the joint accounts and rolled them over to NPS without the consumers’ consent. In the months to come, regulators may discover that this type of rollover happened more frequently than they care to know.

Before funeral directors criticize their brethren who made such rollovers, they need to determine how compliant their joint account contracts are. A funeral director recently provided testimony at a legislative hearing about how safe his preneed accounts were: in a single CD at his local bank. The law requires individual accounts. Since 9/11, the Patriot Act requires financial institutions to obtain more information when joint accounts are set up. It is so difficult setting up a joint account these days that §436.053 is no longer practical.

Getting back to the question at hand, you can find an attorney that will be prepared to take on the bank, but your true cause of action is with the prior owner. If that becomes your course of action, the purchase agreement and the issue of your due diligence will be put to the test.

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Bill Stalter answers our questions for educational purposes only. It is The Dead Beat’s intent to give the reader general information about legal issues, not to provide legal advice. If a reader needs legal advice, he or she should hire an attorney. Reading The Dead Beat should not be used as a substitute for legal advice from an attorney. When Bill provides legal advice he does so for Stalter Legal Services in Overland Park, Kansas. Bill also provides consulting services through Preneed Resource Consultants, which can be found at www.preneedresource.com.