What is the purpose of a prearrangement funeral service trust agreement?

The purpose of a prearrangement funeral service trust agreement centers on establishing the duties of trustees for the funds collected for future funeral services. This type of agreement ensures that the money set aside for the funeral is managed properly and used solely for the services defined in the agreement when the time comes. It provides a legal framework that governs how the funds are held, invested, and eventually disbursed, thereby giving families peace of mind that their prearrangements will be honored.

In contrast, while guaranteeing lower prices for merchandise may be a desired outcome for some, it is not the primary focus of a trust agreement. The trust is not designed to allow families to pick any service after a death; it is meant to secure specific arrangements in advance. Lastly, the trust does not eliminate the need for insurance; rather, it serves a different function by ensuring the funds are set aside specifically for the funeral arrangements rather than relying on other financial instruments like insurance for coverage.