10/13/2003

Reporting of Unclaimed Funds by Ohio Funeral Homes

By: T. Scott Gilligan, OFDA General Counsel

Unclaimed funds include dormant checking and savings accounts, certificates of deposit, and trust funds. Funds can become dormant if there is no activity in the account for a period of five (5) years in the case of savings, checking or CD accounts, and three (3) years in the case of trust funds. Since periodic payments of interest on the account does not constitute "activity", it is not that difficult for an account or trust fund to become dormant.

Preneed Funeral Accounts
This issue has great importance to Ohio funeral homes because preneed funds that are invested in savings, CD, or POD accounts, or in trust funds, often will remain dormant for years. After the initial deposit of the preneed funds in the account, it is not unusual for no further deposits or withdrawals to be made to the preneed account until the death occurs and the funeral services are provided. If the length of time exceeds five (5) years for savings, CD and POD accounts, or three (3) years for trust funds, technically the account is regarded as an unclaimed fund under Ohio law.

To address this issue, we notified the Ohio Division of Unclaimed Funds and inquired as to whether it would regard preneed accounts and trust funds as unclaimed funds if no activity occurred in those funds. We were advised that preneed funds under these circumstances would NOT be regarded as dormant, and as a result, do not have to be reported as unclaimed funds under Ohio law. Therefore, even though funeral homes may have savings, CD and POD accounts for preneed clients that have had no activity for over five (5) years, or preneed trust accounts that have had no activity for over three (3) years, they do not have to be reported on the Annual Report that the funeral home submits to the Ohio Division of Unclaimed Funds.

Form OUF-1
Although most preneed accounts and trust funds will not be regarded as unclaimed funds, this does not mean that Ohio funeral homes are relieved from the responsibility of filing an Annual Report of Unclaimed Funds. Prior to November 1, 2003, funeral homes, as well as other businesses in Ohio, will be required to submit the Annual Report indicating whether they have any unclaimed funds. If there are no unclaimed in the possession of the funeral home, a simple filing indicating that no funds are held can be made either electronically or by the submission of Form OUF-1 available from the Ohio Division of Unclaimed Funds. All forms and instructions may be downloaded from www.com.state.ohio.us/unfd.

Example of Unclaimed Funds
Is your funeral home a holder of unclaimed funds? To make that determination, management should engage in a diligent search of business records. Typically, if a funeral home is a holder of an unclaimed fund, it usually consists of an uncashed check that the funeral home issued to an employee or a customer. The following would constitute "unclaimed funds":
* payroll checks uncashed for one year
* commission checks uncashed for one year
* workers compensation benefits uncashed for one year
* expense reimbursement checks uncashed for five years
* refund or rebate checks uncashed for three years
* dividend checks uncashed for five years
* liquidating distributions from a 401(k) plan uncashed for three years
* unclaimed preneed accounts or trust funds when the funeral home is aware that the death has occurred and the funeral services were rendered by another funeral provider

If a funeral home has an unclaimed fund in excess of $50.00, it is first required to mail a Form OUF-8 Notice of Unclaimed Funds to the last known address of the payee of the check. A self-addressed, stamped envelop must be included. If the payee does not return the Notice to the funeral home within thirty days, the funds are regarded as unclaimed and must be reported and submitted to the Division of Unclaimed Funds using Form OUF-2.

Bank Account Advisory
There is one other advisory Ohio funeral homes should keep in mind regarding funds in savings, CD and POD accounts. To prevent a depository bank holding the funds from regarding the funds as dormant, you should initiate activity in the preneed accounts on an annual basis. You can do this with CD accounts by making sure that CDs are regularly re-invested. In the case of simple savings accounts, the funeral home should notify the depository financial institution on an annual basis that the accounts are preneed funeral accounts and are still active.

If any OFDA member has questions regarding the matters discussed in this article, please feel free to contact OFDA General Counsel, T. Scott Gilligan at 513-587-4440.