If a trust fund is established for an irrevocable preneed contract, what can the funds NOT be used for?

When a trust fund is established for an irrevocable preneed contract, the funds are specifically designated to ensure that the funeral services outlined in the contract are paid for at the time of need. These funds must adhere to strict guidelines regarding their use, particularly in relation to the contractual obligations set forth.

The correct answer highlights that the trust fund cannot be used to cover administrative costs of the funeral home. This is because the primary function of an irrevocable preneed trust is to secure payment for the designated funeral services, rather than to support the operational costs of the funeral home itself. The funds need to be allocated strictly for the services promised in the contract, ensuring that when the time comes, the specific arrangements are honored as agreed.

Using trust fund resources for administrative expenses would undermine the integrity of the irrevocable contract. It would divert funds away from their intended purpose, risking a situation where the promised funeral services could be compromised or not fully covered. This focus on protecting the contractual integrity is essential in maintaining the trust of those who invest in preneed contracts.