North Carolina Funeral Law Practice Exam

What percentage of any payments on a preneed funeral contract can a preneed licensee retain outside of a trust?

1. Five percent

2. Ten percent

3. Fifteen percent

4. Twenty percent

The correct answer is: Ten percent

In North Carolina, when dealing with preneed funeral contracts, the law allows a preneed licensee to retain a specific percentage of any payments made outside of a trust. The correct answer is that a preneed licensee can retain ten percent of any such payments. This regulation is designed to ensure that a substantial portion of the funds is secured in a trust account to guarantee that the preneed funeral services can be fulfilled when needed, while also allowing the funeral provider to maintain a portion for operational costs associated with selling the preneed contract. This stipulation supports consumer protection by mandating that the majority of the funds be safeguarded for the intended funeral services, thus preventing potential misappropriation or misuse of preneed funds by licensees. Understanding this percentage is crucial for those involved in funeral services, as it directly impacts financial practices and compliance with state laws.