Buying a funeral home in Florida

A funeral home helps families after a death: moving and caring for the body, embalming or preparing it, arranging visitation and services, filing death certificates and permits, working with cemeteries, and selling caskets, urns and other merchandise. Cremation is a large part of the work in Florida, so many funeral homes own a crematory or contract with one. The home is paid per call (each death it serves), either by the family at the time of need, often from life insurance, or through a preneed contract bought years in advance.

Preneed is the long-term side of the business. People pay now, into a trust or through insurance, and the home must deliver the service later. That means future calls, and a real obligation. Most funeral homes have a licensed funeral director in charge, other funeral directors and embalmers, preneed sales staff, office staff and part-time attendants, plus a building with chapels and a preparation room, and vehicles. Reputation and family relationships built over decades matter more than advertising.

• A steady number of calls per year in a community where the home is well known. Families often return to the home that served their parents.
• A strong preneed book (contracts sold in advance), properly held in trust or insured, priced to cover future costs. Today's preneed sales are tomorrow's calls.
• A funeral director in charge who is staying, plus licensed staff who can step in.
• Staff families trust: the director who sat with them is often the reason they come back.
• Facilities in good repair, with room for visitation, and a well-run crematory if it has one.
• Services and prices that suit local demand, including cremation options.
• A clean record with state regulators.
• Good relationships with hospitals, hospices, churches and cemeteries.

Funeral homes are licensed by the Board of Funeral, Cemetery, and Consumer Services and the Florida Department of Financial Services (DFS). Each establishment needs a funeral director in charge. They generally must also hold an embalmer license if the home has an embalming room, and can cover at most two locations within 75 miles. A change in ownership requires a new license and inspection (section 497.380).

The owner doesn't need to be a funeral director. But everyone who controls the business or owns more than 10 percent must be disclosed, and the state reviews their background. A crematory needs its own license, and a change in its control needs state approval first (section 497.606).

Selling preneed contracts takes a preneed license. When ownership changes, the new owner has 30 days to apply to transfer it, or must apply for a new license (rule 69K-5.0022). For trust-funded contracts, the home must deposit at least 70 percent of the price of services and all the money for cash advance items (purchases made for the family). For merchandise, it's 30 percent of the price or 110 percent of wholesale cost, whichever is greater (section 497.458). Moving a preneed trust to a new owner takes written approval from DFS and the trustee.

• Calls per year for five years, by type (burial, cremation, direct cremation), and average revenue per call.
• The preneed book: how many contracts, what they promise, how each is funded, and how the trust balance compares with today's cost of delivering those services. A shortfall is a liability you inherit.
• Trust statements, insurance policy assignments and DFS examination reports.
• Every funeral director's and embalmer's license, and the plans of the director in charge.
• Crematory equipment, permits and maintenance records.
• Building condition, vehicles and any environmental issues.
• Complaints and lawsuits, and whether price lists and paperwork follow the FTC Funeral Rule.
• Which community relationships rest on the owner personally.
• Insurance-funded preneed policies: which insurer issued them, and whether they're assigned to the funeral home.

• How many calls do you handle a year, and how has that changed?
• How many preneed contracts are outstanding, and how are they funded?
• Who's your funeral director in charge, and do they plan to stay?
• Do you own a crematory, or contract with one?
• How do today's prices compare with what your preneed contracts promised?
• How do new families find you, and what do they say?
• How many of your community relationships run through you personally?