Tennessee Funeral Service Laws Rules & Regulations (LRR) Practice Exam

If a trust account is revocable, what rights does the purchaser of merchandise and/or services have before the contract beneficiary's death?

1. May not withdraw any funds

2. Entitled to receive all payments and earnings thereon

3. Can only withdraw the principal amount

4. Limited to a portion of funds

The correct answer is: Entitled to receive all payments and earnings thereon

When a trust account is established as revocable, this means that the grantor or creator of the trust holds certain rights over the funds within that account. Specifically, the purchaser of merchandise and/or services has the right to receive all payments and the earnings generated by those funds before the death of the contract beneficiary. This entitlement arises from the nature of revocable trusts, which allow the beneficiary or trustor to modify or revoke the trust at any time, effectively maintaining control over the assets. In the context of the funeral service laws, this capability ensures that the purchaser can benefit from the financial growth of their investment, which is essential for planning and covering future funeral expenses. This provision also reflects the flexibility that revocable trusts provide in estate planning, allowing individuals to access their assets as needed. Understanding the rules surrounding trust accounts is essential for both funeral service providers and consumers, as it affects how pre-paid services and merchandise are managed financially.