Sunday, March 18, 2012

Cemeteries and Perpetual Care Funds

I have written previously that the Lower Delmarva Genealogical Society received a gift of material pertaining to Marion Station, Maryland. A good part of it was related to the three cemeteries in that area. I was reading a letter in the box of material that concerned the St. Paul Perpetual Care Program. St Paul cemetery is like many small non-commercial cemeteries in the area. The maintenance of the cemetery came from three sources. The cemetery offered two plans for cleaning and maintaining the cemetery as a whole and the individual lots. One was an annual fee survivors/families of the deceased would pay for cleaning which usually ranged between $5 to $10 a plot. The other plan was the Perpetual Care Program where the buyer of the plot would have included in the plot a charge for cleaning the plot “forever.” The third was families took care of their own plots. Of course there was also those who didn’t pay anything due to all family members dying off or no longer lived in the area.

When this letter was written (in the 1960’s) the cemetery had invested their money and was receiving about 4% interest which was enough to pay the groundskeeper. So what is the effect today when the Federal Reserve’s December 17th 2008 decision to cut its interest rate to less than a quarter of a percent (meant to encourage investors back into the stock market) plus the effect of printing money with nothing to back it. I can not help but think for many cemeteries, the prospect of depressed interest rates will have dire consequences to endowed/perpetual care trusts that are subject to state laws which limit or restrict equity investments. With Bank interest rates between a quarter of a percent to one percent and the stock market only a couple of points higher and State laws historically have imposed conservative investment standards upon endowed care funds to ensure preservation of the trust corpus, bad times are ahead for many cemeteries.

In Delaware, businesses that sell burial lots with perpetual care for profit has to deposit a sum equal to at least one tenth of the gross sales price for the maintenance of burial lots sold with perpetual care into a trust fund. I knew someone once who owned a cemetery back in the 1980’s and he was telling me what a great deal it was as they had all this money in a trust fund that paid their expenses and any selling of plots was gravy money. But the question is does the interest rate produce enough money today to maintain the cemetery? Already several older non-profit cemeteries that did not have any form of fund set up for care have become overgrown and volunteers and municipalities have to clean up and maintain these cemeteries. If not they become hangouts for various people. How long will the other cemeteries be able to hold out before asking for aid? In effect the Federal Government by lowering the interest rate has once again put a “Tax” on everyone who is interested in keeping up standards for the community.

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