07/24/2006

OHIO'S NEW RIGHT OF DISPOSITION LAW

By: T. Scott Gilligan, OFDA General Counsel

As a result of this new law, Ohio funeral directors will have more options, clearer directions and greater protections when dealing with family disputes over funeral and disposition decisions.

Appointment of Representative. Many Ohio funeral directors have had to explain to preneed consumers who were concerned that family members would change their funeral or disposition arrangements that there was no method under Ohio laws to override the contrary wishes of family members. Starting October 9, 2006, the date HB 426 takes effect, that will change.

The new law allows an individual during his or her lifetime to appoint a representative who will have the top priority when it comes to making funeral and disposition arrangements. If an individual appoints a representative in a document that meets the requirements of HB 426, that representative has full authority, even over the contrary wishes of a spouse, to make funeral and disposition arrangements.
If a consumer wishes to appoint a representative, the appointment will only be valid if made in a written document that meets the requirements of HB 426. OFDA members should note that owners and employees of funeral homes, cemeteries and crematories may not be appointed as a representative unless they are related by blood or marriage to the individual making the appointment. Appointment of Representative forms are available free of charge to members by contacting OFDA or downloading the documents from the OFDA website. www.MyOFDA.org/forms

Priority List. Currently in the Ohio Revised Code there is a priority list of who may authorize cremation, but not burials or other dispositions. HB 426 replaces the cremation authorization list with a new comprehensive priority list that controls all dispositions. The list, which is spelled out in Section 2108.81 of the Revised Code, establishes the following order of priority:
(1)The representative appointed by the decedent to have the right of disposition.
(2)The decedent's surviving spouse.
(3)The decedent's surviving child or children.
(4)The decedent's surviving parent or parents.
(5)The decedent's surviving sibling or siblings.
(6)The decedent's surviving grandparent or grandparents.
(7)The lineal descendants of the decedent's grandparents as spelled out in Section 2105.06 of the Revised Code.
(8)The decedent's personal guardian at the time of death.
(9)Any person willing to assume the right of disposition, including the personal representative of the estate or the licensed funeral director with custody of the body, after attesting in writing and good faith that they could not locate any of the persons in the above priority list.

In the event that several individuals of the same class cannot agree on funeral or disposition arrangements, the law permits the majority to control. Additionally, if an individual cannot be located, the majority of those who are available will control. For example, if a widow dies with five adult children, two of whom want cremation, one of whom wants burial and two of whom cannot be located, the children who opted for cremation would prevail.

If there is not a majority present to resolve a dispute, any party, including the funeral director, may petition the probate court to decide the issue. The probate court is given five factors in the statute to consider when rendering a decision as to who will control the disposition.

Loss of Right of Disposition. In order to exercise the right of disposition, an individual must be 18 years or older and mentally competent. Persons who have been appointed as a representative or who hold the right of disposition because of their relationship with the decedent will lose that right in the following situations:
*The person dies or is declared mentally incompetent by the probate court.
*The person resigns or declines to exercise the right of disposition.
*The person refuses to exercise the right within two days after notification of the decedent's death.
*The person cannot be located with reasonable effort.
*The person is charged with the murder, aggravated murder or voluntary manslaughter of the decedent.
*The person is charged with an act of domestic violence and it is alleged that the violence resulted or contributed to the decedent's death.
*The person is the spouse of the decedent and a petition for divorce has been filed and has not been dismissed at the time of death.
*The person is the spouse of the decedent and the probate court determines that the decedent and the spouse were "estranged" at the time of death.

Protections for Funeral Home. Primarily through the efforts of OFDA, HB 426 provides an extensive array of protections for funeral homes, cemeteries and crematories against lawsuits and claims by disgruntled family members. As long as employees of funeral homes, cemeteries or crematories are acting in good faith, they may rely upon statements made to them by persons claiming to have the right of disposition. Moreover, the statute provides immunity against lawsuits in the event that reliance was misplaced. For example, if a person misrepresents that they have the right of disposition, the funeral home will not be responsible for relying upon that misrepresentation unless it can be shown that the funeral director had reason to know that the misrepresentation was false.

The law also provides that a funeral director who is aware of a dispute regarding the right of disposition may refuse to accept the remains or to complete the funeral or disposition until the funeral director receives a court order or a written authorization from the person or persons who have the right of disposition. During a dispute, the statute authorizes the funeral director to embalm or refrigerate the remains in order to preserve them and to add those costs to the funeral bill. Moreover, if the funeral home must seek the intervention of the probate court, the funeral home may add its legal fees and court costs to the funeral bill.

In order to avail themselves of the protections afforded by HB 426, it is important that funeral homes document the claims of a person who represents themselves as the holder of the right of disposition. The most effective way to do this is to have the person arranging the funeral sign a Claim of Authority to Carry Out Disposition form which is available through OFDA. The new form tracks the wording of HB 426 and will help to demonstrate that funeral homes have acted in good faith in relying upon claims made by family members.

Funeral Costs. Another important lobbying victory for OFDA resulted in two important changes to Ohio law regarding funeral costs. First, HB 426 now establishes that a person who holds the right of disposition and purchases goods and services in exercising that right will be responsible for those costs. This means that a person who holds the right of disposition, but is unwilling or unable to pay the costs of the funeral and disposition, loses that right. As a result, funeral homes will not be required to take directions from relatives unless they are willing and able to pay for the funeral.
HB 426 also substantially increases the dollar amount of the preferences that Ohio law gives to funeral bills. Section 2117.25(A)(2) now provides that the first $2,000 of the funeral bill and the first $2,000 of the cemetery bill are given second priority on the list of debts to be paid by an estate. HB 426 raises those amounts to $4,000 and $3,000 respectively. This means that in paying the debts of an estate, the first $4,000 of funeral expenses and the first $3,000 of cemetery expenses are second in priority to the costs of administering the estate. In addition, the sixth preference on the priority list, which now covers the next $1,000 of the funeral bill, is increased by HB 426 to $2,000. As a result, the aggregate preferences given to funeral and cemetery expenses by Ohio law have now increased from $5,000 to $9,000.

Administrative Matters. As a result of HB 426, Ohio funeral homes will want to have Appointment of Representative forms available for consumers by the effective date of October 9, 2006. Starting on that date, funeral homes should also employ the Claim of Authority to Carry Out Disposition forms for their own protection.
There are other administrative matters that Ohio funeral homes will need to address prior to October 9, 2006. HB 426 requires two new mandatory disclosures to be made in preneed contracts used after October 9, 2006. Those two disclosures are as follows:

"NOTICE: Under Ohio law, the person holding the right of disposition of the remains of the beneficiary of this contract pursuant to section 2108.70 or 2108.81 of the Revised Code will have the right to make funeral arrangements inconsistent with the arrangements set forth in this contract. However, the beneficiary is encouraged to state his or her preferences as to funeral arrangements in a declaration of the right of disposition pursuant to section 2108.72 of the Revised Code, including that the arrangements set forth in this contract shall be followed.

NOTICE: You, as the purchaser of this contract, will be notified in writing when the trustee of this contract has received a deposit of the funds you paid the seller under this contract. If you do not receive the notice within sixty days of the date you paid the funds to the seller, you should contact the trustee."
In addition to printing the notices, HB 426 will also require trustees receiving preneed funds to send written confirmation to preneed purchasers of the amount of funds received. That notice must be sent within 15 days after the trustee receives a preneed deposit.

For funeral homes using the OFDA Master Trust, the notification of deposit by the trustee will not be new since OFDA already provides this important consumer protection. OFDA will be sending new preneed contract forms to Master Trust participants which incorporate the new disclosures required by the statute. OFDA will also make available to members new Antemortum Cremation Authorization forms which also are required by HB 426 to contain a mandatory disclosure informing the individual signing the authorization that the decision to cremate is subject to change by the holder of the right of disposition.

New and updated forms are available at www.MyOFDA.org/forms.

OFDA members with questions regarding HB 426 may contact Scott Gilligan at (513) 871-6332.