New Jersey Mortuary Science Practice Exam

What kind of account may a provider temporarily hold preneed funds in?

1. A personal interest-bearing account

2. A separate non-interest bearing account

3. An escrow account with a bank

4. A joint account with the purchaser

The correct answer is: A separate non-interest bearing account

The appropriate choice for holding preneed funds is a separate non-interest bearing account. This type of account is specifically designed to keep the preneed funds organized and secure, while also ensuring that they are not mixed with personal funds or used for other purposes. By placing funds in a separate non-interest bearing account, providers uphold fiduciary responsibilities and maintain the integrity of the funds until they are needed for the specific purpose of fulfilling preneed funeral arrangements. Using a personal interest-bearing account is not suitable because it introduces the potential for commingling of personal funds and preneed funds, which may lead to complications regarding the intended use of the funds. An escrow account with a bank is also a viable option, as it provides a level of security; however, the question specifically calls for a temporary account that may not be structured in that manner. A joint account with the purchaser could create liability issues and does not offer the needed separation of funds, which is critical in preneed arrangements. Thus, the separate non-interest bearing account is clearly the most appropriate and compliant option for holding preneed funds temporarily.