California Funeral Director License Practice Exam

What is the annual administration fee for preneed trusts?

1. 2%

2. 4%

3. 6%

4. 8%

The correct answer is: 4%

The correct answer is 4%, which is the established annual administration fee for preneed trusts in California. This fee is significant as it ensures that funds within the preneed trust are properly managed and administered. The 4% administration fee typically covers the trust's operational costs, including record-keeping, compliance with regulatory requirements, and investment management, thereby ensuring that the funds are available for the intended purposes when needed. In the context of preneed trusts, it is important for both consumers and funeral directors to understand this fee structure, as it impacts how much money will ultimately be available to cover the designated funeral expenses. Knowing the correct percentage allows consumers to plan more effectively for their future funeral costs and ensures transparency within the management of these funds.