professional Trustees

Glossary of Funeral Trust terms

 

Below are a number of terms regularly used in relation to prepaid funeral plans and Funeral Trusts.

 

Actuary – A professional who measures and manages risk and uncertainty. In relation to funeral plans an actuary uses the planholders dates of birth/postcode/sex to estimate when funerals will need to be paid for and at what cost. By looking at the investments held by the trust and a prudent estimated growth they can then help to ensure the trust holds sufficient assets to meet the estimated costs.

 

Auditor – A professionally qualified and authorised accountant who can verify that the accounts of the trust are materially accurate i.e. there are no major errors. Funeral Plan Trusts require an audit of their accounts each year.

Beneficiary – The person who will receive funds from the trust. In relation to a funeral plan the 1st beneficiary is the plan holder and the 2nd beneficiary is the provider or in the case of your own trust the funeral director. The 2nd beneficiary will be responsible for paying for the cost of providing the funeral.

 

Data Protection – Rules to ensure peoples personal data is protected and only used fairly and lawfully.

 

Discretionary Trust – This is the type of trust that is set-up for a funeral plan trust. A discretionary trust is flexible and the trustees decide when and how the its assets are distributed. This is based on the criteria set out in the trust document as agreed by the settlor.

 

FSA – Financial Services Authority regulates the financial services industry in the UK. Now split into the FCA Financial Conduct Authority and the Prudential Regulation Authority (Bank of England). Because of the nature of prepaid funeral plans there is discussion that these may become regulated also.

 

Funeral Plan – A prepaid funeral plan enables you to arrange and pay for a funeral of your choice at today’s prices.

 

GDPR – Regulation that came in to force in 2018 in respect of Data Protection. General Data Protection Regulation. (Privacy Policy).

 

Investment Manager – The person who invests the assets of the trusts in accordance with the criteria set by the trustees. The aim being to at least meet the actuary’s estimated growth and hence that the trust will have sufficient funds in the future to meet rising funeral costs.

 

Money Laundering – Concealing profits from illegal activities by making them seem legitimate i.e. large deposits into the funeral plan trust that don’t relate to valid funeral plans.

 

Plan Holder – The person who the funeral plan covers. Normally this is the person who purchased the plan unless it was purchased on behalf of another.

 

Plan Provider – In the case of the Funeral Director setting-up their own trust this will be the funeral director.

 

Settlor – The person who places the money into the trust. In the case of a Funeral Director’s own trust this would be the funeral director.

 

Trust – A way of managing assets on behalf of the beneficiaries.

 

Trust Bank Account – A special type of bank account that is required for a discretionary trust to ensure it can be managed   with the trust document. It is not sufficient to simply set-up a client account.

 

Trust Document – A legal document that sets out the wishes of the settlor.

 

Trustee – The person or persons responsible for managing the trust.