Request By:
Mr. Edward B. Hatchett, Jr.
Counsel, Division of Banking
Department of Banking & Securities
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You have a problem in connection with pre-need funeral contracts, which are administered by your department pursuant to KRS 316.310 to 316.991. Such a contract anticipates that a funeral director will furnish funeral services for the "beneficiary" upon the latter's death. Under KRS 316.320, all pre-payments for the funeral services to be performed in the future are to be held by the funeral director as a trustee and deposited "in a trust account with a bank or trust company", or invested in a savings and loan association. All earned interest goes with the principal. Under these statutes all or a substantial portion of the money necessary to bury the "beneficiary" is paid into this trust account, and, upon the death of the beneficiary and proper certification of full performance of the contract by the funeral home, the funds are released to the performing funeral home. Under certain conditions of notice, a beneficiary may procure a refund of such funds paid in. KRS 316.330.
Your question is whether a trustee-funeral director can transfer such a trust fund from one bank to another, without regard to whether the purchased merchandise has been delivered or the promised services have been performed.
KRS 316.320(2) and (3) read:
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"(2) All payments made under the agreement, contract or plan are and shall remain trust funds with the financial institution until the death of the person for whose service the funds were paid and until the delivery of all merchandise and full performance of all services called for by the agreement, contract or plan, except where payment is made pursuant to KRS 316.330.
"(3) The funds shall not be paid by the financial institution until a certified statement is furnished to the financial institution setting forth that all of the terms and conditions of the agreement have been fully performed by the person, association, partnership, firm or corporation. Any balance remaining in the fund after payment for the merchandise and services as set forth in the agreement, contract or plan shall be paid to the estate of the beneficiary of the agreement, contract or plan."
KRS 316.340 reads:
"All trust funds mentioned in KRS 316.310 to 316.370 and 316.991 shall be deposited in the name of the trustee, as trustee, within thirty (30) days after receipt thereof, with a bank or trust company or invested in a savings and loan association and shall be held together with the interest, dividends, or accretions thereon, in trust, subject to the provisions of KRS 316.310 to 316.370 and 316.991. The trustee at the time of making deposit or investment shall furnish to the financial institution the name of each payor, and the amount of payment on each account for which the deposit or investment is being made."
The funeral home desiring to participate in this program must be licensed by the Department of Banking. KRS 316.350. Under KRS 316.360 the licensee is required, among other things, to keep a record of the names of the financial institutions in which the funds are deposited or invested.
KRS 316.320 refers to "a bank or trust company" or savings and loan association. KRS 316.340 refers to "a bank or trust company" or a savings and loan company. KRS 316.360 mentions "financial institutions" in which funds are deposited. (Emphasis added). Thus two statutes mention "bank" in the singular and one in the plural. KRS 446.020(1) provides that a word importing the singular number only may extend and be applied to several persons or things, as well as to one person or thing, and a word importing the plural number only may extend and be applied to one person or thing as well as to several persons or things. The statute provides an interchangeability of singular and plural things mentioned in a statute.
Greene v. Slusher, 300 Ky. 715, 190 S.W.2d 29 (1945) 31. It is also significant that there is no provision in the act which prohibits the use of more than one bank or savings and loan association.
Realizing that the interest on such funds accrue to the trust fund and that a greater return on the money will result to the advantage of the funeral home as well as the beneficiary or his estate, we are of the opinion that a trusteefuneral director has the authority to transfer an entire preneed funeral contract trust fund from one bank, or savings and loan association, to another, upon a showing to the Department of Banking that the transfer would result in a greater return for the money and upon giving the beneficiary and the Department notice, prior to any such transfer, of the full facts and figures involved in the transfer. As we said above, KRS 316.320 and 316.330 do not constitute absolute conditions for moving of the funds.
Our conclusion finds support as follows: (1) The statutory rule that singular may be extended to plural; (2) The fact that the statutes do not prohibit such transfers; (3) The fact that such transfers in the lifetime of the beneficiary can promote the financial interest of both the undertaker and the beneficiary; and (4) The conclusion promotes the concept of a trustee's duty of care and preservation of the trust.
The real purpose of the legislation is to provide a method whereby a beneficiary can deal with the reality of death, before it occurs, i.e., by raising all or a substantial part of the money necessary to bury (or otherwise dispose of the body) him. Our construction, we believe, is consistent with the underlying purpose of the statutes. This indeed is the ultimate "lay away" plan. The statutes suggest a financial prudence before the sands of the hour glass drop out.