What is a key requirement of trust fund depository agreements for prearrangement services?

The correct answer highlights that depository agreements must be approved by the board. This requirement ensures that the agreements governing trust funds for prearrangement services are subject to oversight and regulatory compliance. This approval process helps to protect consumers by ensuring that the practices related to the management and investment of these prearrangement funds adhere to established laws and regulations.

Approval by the board also adds a layer of accountability, as it requires review and scrutiny of the terms of the agreement. This is particularly important in the context of handling funds that are meant to cover future funeral expenses, as it helps to ensure that consumers' investments are safeguarded and managed responsibly.

In contrast, having funds in unverified accounts or limiting investments solely to stocks could lead to financial risks and a lack of proper oversight. Verbal agreements also lack the necessary documentation and clarity, which could leave room for misunderstandings or disputes in the future. Therefore, requiring board approval combines necessary oversight with consumer protection, making it a critical component of trust fund depository agreements.