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Bill would let Montana funeral‑trust funds follow ‘prudent investor’ rule to seek higher returns
Summary
The Senate Business and Labor Committee heard Senate Bill 305, sponsored by Sen. Mike Cuff, which would remove a statutory restriction on how prepaid funeral trust funds may be invested and apply the prudent investor rule to increase potential returns for consumers.
Senate Bill 305, carried by Senator Mike Cuff, was heard in the Senate Business and Labor Committee as proponents urged lawmakers to allow prepaid funeral trust funds broader investment authority under the prudent investor rule.
The bill strikes a statutory limitation in the current Montana funeral‑trust law (cited in testimony as 37‑19‑828) and replaces it with the “prudent investor” standard referenced in Montana law, a change supporters said will let trusts pursue higher returns for consumers who prepay funerals.
Senator Mike Cuff, sponsor: “Senate Bill 305 came to me through one of my constituents ... Straightforward, simple bill, consumer focused, and a consumer benefit.” He told the committee the change would align Montana with most other states and “fixes the problem of low returns for Montana consumers by striking the statutory limitation on where the money is invested, replacing it with the more commonly recognized prudent investor rule.”
Terry James, acting executive director of the Montana Funeral Directors Association, said the bill preserves existing reporting and oversight while giving trustees more investment flexibility: “The only change being authorized by this bill is to allow consumers’ monies to be invested in a manner that allows for a greater return for the consumer by emphasizing that these investments must comply with the prudent investor rule.”
Funeral‑industry witnesses described why they seek the change. Brad Longcake said that in the 1980s trust investments were largely limited to federally insured vehicles and that lower interest rates in recent years have left many trusts yielding “1 to 2%” today. Licensed mortician Rick Walter testified those low returns are common now and said broader investment options could boost returns to the “4 to 5%” range for some vehicles, helping offset future incidental costs not guaranteed by the funeral home, such as obituaries or receptions.
Pam Scott, former executive director of the Kansas Funeral Directors Association, described Kansas’ experience using a prudent‑investor‑style approach and said offering multiple conservative investment options (master trust, annuity‑funded trust, municipal bond options) gives consumers choices while protecting funds.
Kevin Bragg, bureau chief for professional licensing at the Montana Department of Labor and Industry, served as the informational witness and answered committee questions about administration and oversight.
Committee members asked how prepaid funeral trusts compare with other ways consumers set aside money. In response, witnesses said trusts allow a consumer to “lock in” the funeral home’s charges and that the bill’s goal is to improve the trust’s earning potential so there is less risk that future incidental expenses will exceed available funds.
No formal action or vote was recorded during the hearing; the sponsor closed and the committee ended testimony on SB 305.
