Coffin makers and funeral planners are increasingly administering funeral and cemetery trusts-an activity once left to banks.
Hillenbrand Industries Inc., a funeral-planning firm in Batesville, Ind., is awaiting approval from the Office of Thrift Supervision for a charter with federal trust powers. The $3.4 billion-asset company owns the world's largest coffin manufacturer, Batesville Casket Co.
One of its competitors in the casket business, United Family Life, Atlanta, is looking at adopting a similar business plan, according to sources close to the company. An application would likely be filed with the OTS under United Family's parent company, Fortis, a Dutch financial services giant.
People set up funeral trusts to ensure that their funeral service and cemetery plot are paid for without burdening family members. Cemetery trusts use funds invested to pay for upkeep of plots.
Hillenbrand applied to the OTS in November to charter Forethought Federal Savings Bank. The firm already manages trust funds set aside for funeral costs through Forethought National TrustBank, a limited-purpose state-chartered institution. With thrift powers, Forethought could administer funeral trusts on a national basis.
Other funeral proprietors have taken a different route. Service Corp. International, the country's largest funeral home operator, sold a trust company it acquired through the purchase of a funeral home. The spinoff, Houston-based Southwest Guaranty Trust Co., manages $1.4 billion of trust assets.
Southwest does more than just funeral and cemetery trusts. Its business is split fifty-fifty between those and traditional personal trusts.
"You don't really rely on one more than the other. Diversification is better," said Hal Guiin, vice chairman of Southwest Guaranty.
Mr. Guiin, who has an accounting background, came to Southwest from Service Corp., as did the trust company's chairman, William E. Mercer, who was chief financial officer of the funeral home operator.
Most of Southwest's funeral and cemetery trust business is referred by funeral directors.
Mr. Guiin added that despite specialization, "every bank is a competitor. Anybody that has a trust department is a competitor."