Cemetery Trust Funds

Training for: Legal Notes

We often receive questions about cemetery trust funds; below is a summary of the basic rules governing these funds.

Types of Trust Funds. Maine law recognizes various types of municipal cemetery trust funds. These include, but are not limited to: (1) “perpetual care funds” established when any person owning or interested in a municipal public cemetery lot(s) deposits funds with the municipal treasurer to care for his/her cemetery lot(s) or their appurtenances (13 M.R.S. §§ 1261-3); (2) funds given in trust to care for lots and/or the grounds of a private or family burial ground that has been accepted by the municipal legislative body (13 M.R.S. § 1222); and (3) funds donated to the municipality in trust for cemetery maintenance or improvement (30-A M.R.S. §§ 5653, 5654).

Management. Generally, the income from a cemetery trust fund must be spent as required by the documents or statutes establishing the fund. If no terms are stated in those documents, the general rules governing management of municipal trust funds apply. See 13 M.R.S. § 1223, 30-A M.R.S. § 5653. A municipal ordinance may also define the services provided when “perpetual care” is purchased for specific cemetery lots (13 M.R.S. § 1262) or may designate the uses of trusts or funds established by the municipality. (Note: 13 M.R.S. § 1305 governs use of cemetery lot sale proceeds).

Unfortunately, many perpetual care documents contain no specific terms or contain merely an agreement to provide “proper maintenance and upkeep” of a particular lot. In such cases, the ordinary and usual maintenance of the lots, without more, should be provided. (Note: state law imposes maintenance standards for veterans’ graves). If an individual perpetual care trust is larger or generates a much higher income than others, services beyond the normal maintenance and upkeep should be provided for that lot, even where the trust document itself does not specify the extra services.

Investment. Unless prohibited by the trust document, trust funds must be invested and managed according to laws governing municipal investments generally (see 30-A M.R.S. §§ 5706 – 5719). The municipality may treat multiple trust funds as a single fund solely for the purpose of investment. However, even if funds are combined for investment purposes, any interest earned or capital gains realized must be prorated among the various trust funds, which means the individual funds must still be tracked and the interest earned for each separate fund must be recorded (see 30-A M.R.S. § 5653(2)). This also makes it easier to determine which accounts may be entitled to additional services beyond “normal” maintenance.

Alteration/Termination. Generally, when the municipal legislative body accepts funds in trust, the municipality is obligated to perform the duties or services outlined in the trust documents. 30-A M.R.S. §§ 5653-4; Johnson v. South Blue Hill Cemetery Assoc., 221 A2d 280, 284 (Me. 1966). A fiduciary or trustee obligation arises on the part of the municipality when it accepts funds for the care of a specific lot (see 13 M.R.S. §§ 1222, 1262). The municipality generally has no authority to alter or terminate cemetery trusts without permission from a court. Also, the Maine Attorney General’s Office has some investigative and oversight authority regarding charitable trusts and may be consulted if there is a need to amend or terminate a trust.

For more information on municipal obligations
regarding cemeteries, see our information packet on the topic, available in the members’ area of website (www.memun.org) (By S.F.P.)