North Carolina Funeral Law Practice Exam

Which of the following is a requirement for burial associations regarding accounts?

1. Maintain a checking account

2. Place a portion of assessments in a reserve account

3. All members must have insurance

4. File annual reports

The correct answer is: Place a portion of assessments in a reserve account

The requirement for burial associations to place a portion of assessments in a reserve account is essential for several reasons. This practice ensures that the association has enough funds set aside to meet future obligations for providing burial services. Reserve accounts act as a safety net, helping the association cover unpredictable expenses or unexpected increases in costs associated with burial services. By maintaining this financial stability, burial associations can fulfill their promises to members and beneficiaries, thereby enhancing trust and reliability within the community they serve. Maintaining a checking account, while useful for day-to-day operations, is more of an operational necessity rather than a specific legal requirement. Similarly, having insurance for all members may not be a mandated condition but rather a benefit offered by some burial associations. Filing annual reports might be an administrative requirement but does not directly relate to the financial management aspect required for sustainability as a burial association. Therefore, placing a portion of assessments into a reserve account stands out as a crucial legal requirement.