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Senate committee hears bill to broaden investments for prepaid funeral trusts
Summary
Senate Business, Labor, and Economic Affairs heard SB 305, which would replace a statutory investment limitation for prepaid funeral trusts with a 'prudent investor' standard, proponents say the change could raise consumer returns while preserving reporting requirements to the Department of Labor.
Senate Business, Labor, and Economic Affairs on Tuesday heard Senate Bill 305, introduced by Senator Mike Cuff, to change how prepaid funeral trusts in Montana may be invested. Cuff said the measure would strike a decades-old statutory limitation and replace it with the more flexible "prudent investor" standard found in title 2, chapter 28, allowing trustees to seek higher returns for consumers.
The bill’s supporters, including the Montana Funeral Directors Association, told the committee the change is narrowly targeted at improving consumer outcomes. "This legislation seeks to enhance the financial security of prearranged funeral contracts," Terry James, acting executive director of the Montana Funeral Directors Association, said. James said the bill keeps existing reporting requirements to the Department of Labor and limits its change to the investment standard.
Rick Walter, a licensed mortician who testified as an individual, said trusts currently average about 1–2% growth and that broader investment options could produce higher returns over time. "This simply allows that trustee to invest the funds that's going to gain interest over time," Walter told the panel. Pam Scott, former executive director of the Kansas Funeral Directors Association, said Kansas has used trust options since 1983 and described master-trust and annuity-based approaches as examples other states employ.
Committee members questioned how trusts protect consumers against rising funeral costs and whether funeral homes charge fees to manage trusts. Proponents said trusts allow consumers to lock in current funeral-service pricing while any non-funeral-home incidentals (for example, obituary costs) may still fall to families; witnesses testified that funeral homes do not charge families an administrative fee to set up trust accounts.
Kevin Bragg of the Department of Labor and Industry appeared as an informational witness and confirmed the department’s role in administering the board-related reporting. Senator Cuff closed by directing members to the bill text and asked for their consideration. The committee took testimony but did not take a vote during the hearing.
The bill now awaits any committee amendments and future scheduling for committee action.
