What can you do with the proceeds of a preneed contract if the funeral home goes out of business?

The correct answer is that you can use the proceeds at any funeral home of your choice. Preneed contracts are designed to help consumers plan for future funeral expenses, and the funds paid into these contracts are typically held in a trust or another secure fund to ensure that they are available when needed. If the original funeral home goes out of business, the funds are not lost. Instead, the law often allows individuals to transfer the proceeds to another funeral home, which provides flexibility to consumers looking for continuity and support during a difficult time.

This choice reflects the protection offered to consumers in preneed contracts, ensuring that their pre-paid funeral arrangements remain valid and accessible, regardless of the status of the original service provider. This is critical because consumers invest in these contracts with the expectation that their wishes will be honored and that their funds can be used for the services they intended.

Looking at the other options, using the funds only at the original funeral home becomes impossible if that location ceases operations. Transferring the funds to a bank account does not adhere to the established regulations governing preneed contracts, as such funds typically need to remain in designated trust accounts for proper management and security. Forfeiting the funds to the state would lead to loss of the anticipated