Funeral home compliance checklist: preneed, licensing, crematory, and FTC Funeral Rule
By Jason Taken, Business Advisor, HedgeStone Business Advisors · Last reviewed · 7 min read
A funeral home compliance checklist covers five areas: current licenses and a designated funeral director in charge, FTC Funeral Rule price lists and statements, preneed deposits and reconciliations under state law, crematory licensing, permits, and authorizations, and the OSHA formaldehyde and bloodborne pathogen programs in the prep room. Assign every recurring deadline to a named person.
Key takeaways
- Federal rules are the same everywhere; licensing, preneed trusting, and crematory rules are set by each state, so pair this list with your state's statutes.
- The FTC's compliance guide, edited in January 2025, cites penalties of up to $53,088 per Funeral Rule violation, and online price posting is still not federally required.
- Run the Preneed Reconciliation Ladder once a year, not only before a sale; a shortfall found early is cheaper to fix.
- Formaldehyde monitoring repeats every six months while exposures are at or above the 0.5 ppm action level, and formaldehyde and bloodborne pathogen training both repeat at least annually.
Keep this list where the funeral director in charge will see it monthly. It is written for owners running a firm, and for new owners in their first year, rather than for a buyer auditing someone else’s records. Federal rules apply the same way in every state. Licensing, preneed, and crematory rules do not, so we use Texas as a worked reference and point you to your own state’s rules on our state-by-state pages. Compliance is also a value question: the operations hub explains how clean records show up in the price a buyer will pay.
1. Are every license and designation current, and on one calendar?
They should be, with each renewal date in a shared calendar and a second person who knows where the originals are kept. A lapsed license is one of the few compliance failures that can stop a firm from operating at all.
Licenses and designations
- Establishment license for each location. Renewal date, posting requirement, and the name on the license. A license in a former owner’s name is a problem waiting for an inspection.
- Every individual license. Directors, embalmers, and anyone in a provisional or apprentice status, with continuing-education hours tracked. One expired embalmer license can idle the prep room.
- The funeral director in charge. Named, current, and reported to the board. Under Texas Occupations Code chapter 651, each establishment must designate one, report any change promptly, and that person is “ultimately responsible for compliance with the mortuary laws.”
- Crematory license. Usually separate from the establishment license. Texas, for example, requires proof that the owner or operator is trained and certified by an approved organization.
- Preneed seller authority. Any state permit to sell preneed, plus a current agent appointment with each insurer whose policies the firm sells.
2. Does your FTC Funeral Rule paperwork match what staff actually do?
The documents are the easy half. The Rule is tested at the arrangement table and on the phone, so check practice as often as paper.
FTC Funeral Rule
- General Price List with a current effective date. Offered at the start of any in-person discussion of arrangements or prices, under 16 CFR Part 453. Our FTC Funeral Rule definition lists what it must contain.
- Casket and outer burial container price lists. Shown before families see the merchandise, and matching every model on display.
- Phone answers. Anyone who answers, including the after-hours service, gives accurate prices from the lists without requiring a name or a visit.
- A Statement of Funeral Goods and Services Selected for every arrangement. Itemized, with the required disclosures and a written reason for any embalming charge.
- Retention. Price lists kept at least one year after they were last given out, and each statement kept as the Rule requires.
- Status check. The FTC’s compliance guide for providers, edited in January 2025, cites penalties of up to $53,088 per violation. As of November 2026 the FTC has issued no proposed or final rule after its 2022 advance notice, so online price posting is not federally required; check state law.
3. Is every preneed dollar where your state says it should be?
Each contract’s money should be in the right account, in the required amount, by the required deadline, and you should be able to prove it from outside statements. State law sets the percentages and deadlines.
Preneed
- Deposit log by contract. Date collected, amount deposited, and date deposited, compared with your state’s trusting percentage and deadline. In our experience, late deposits are among the first things an examiner flags.
- Annual filings. Any report or examination response the regulator requires, filed on time, with a copy kept with the trust statements.
- Insurer reconciliations. Each insurer’s policy listing tied to the register, with assignments and beneficiary designations correct.
- Contract forms. Current state-required language, the correct revocable or irrevocable designation, and the guaranteed or non-guaranteed election marked on every contract.
- A yearly reconciliation. Climb all five rungs of The Preneed Reconciliation Ladder: register completeness, match to funding, verify funding values, re-price obligations, compute the gap. The preneed shortfall calculator gives a quick first estimate of the gap.
How trust funds are invested, and what fees they bear, is covered in our guide to preneed trust investments and fees.
4. Is the crematory licensed, permitted, and keeping its records?
Cremation errors are irreversible, so the records are the compliance program. Air permits for crematories are generally issued by the state, and their conditions vary.
Crematory
- Air permit or permit-by-rule on file. In Texas, crematories are permitted by rule if designed and operated under TCEQ’s 30 TAC §106.494, and the permit by rule must be claimed before construction begins. Keep the claim and any conditions with the operating log.
- Signed authorization before every cremation. From the legal authorizing agent, with any required waiting period met and the death certificate or permit in the file.
- Identification from removal to return. A tag or disc system logged at each handoff, so every set of cremated remains can be traced to a case number.
- Operator certification. Each operator’s certificate current, if your state requires one.
- Maintenance and operating logs. Retort service, repairs, and any readings the permit requires. These logs answer most regulator and buyer questions.
5. Is the prep room meeting OSHA’s formaldehyde and bloodborne pathogen standards?
Both standards apply based on employee exposure, not firm size. Each requires monitoring or planning, training, and long-lived records.
Prep room safety programs
- Formaldehyde monitoring. Under 29 CFR 1910.1048, the limits are 0.75 ppm over eight hours and 2 ppm over 15 minutes, with a 0.5 ppm action level. Repeat monitoring at least every six months while results are at or above the action level, and after changes in staff, equipment, or process. Our formaldehyde compliance guide covers ventilation.
- Formaldehyde training and eyewash. Training at initial assignment and at least annually. Eyewash must be in the immediate work area if eyes could be splashed with solutions of 0.1% formaldehyde or more.
- Formaldehyde records. Exposure records kept at least 30 years.
- Bloodborne pathogens exposure control plan. Written, accessible, and reviewed at least annually under 29 CFR 1910.1030.
- Hepatitis B vaccination and training. Vaccination offered within 10 working days of initial assignment; training at assignment and within one year of the last session. Training records are kept three years; medical records for the duration of employment plus 30 years.
6. What does a quarterly self-audit look like?
About half a day, done by someone other than the person who did the work. The goal is to find a problem while it is still a handful of files, not a pattern a regulator or buyer will measure across years.
- Sample the statements. Pull ten signed statements from the quarter, spread across burials, cremations with services, direct cremations, and preneed maturities.
- Compare each to the price list in effect that day. Every charge should appear on that list at that price, with no fee the list does not show.
- Make three test calls. One during business hours, one in the evening, one on a weekend, asking for the direct cremation price and the basic services fee.
- Trace the quarter’s preneed money. For each contract sold, match the deposit to the trust or insurer statement and note the days between collection and deposit.
- Check the prep room file. Latest monitoring date and result, training sign-in sheets, and the exposure control plan’s review date.
- Write one page. Each finding, the fix, the person responsible, and a date. File it with the quarter’s records, so the next review starts by confirming last quarter’s fixes.
7. Who owns each recurring deadline?
One named person per line. A calendar with no owner is a list of good intentions.
| Item | Frequency | Basis | Typical owner |
|---|---|---|---|
| License renewals and continuing education | Per state cycle | State board rules | Funeral director in charge |
| General Price List review | Annually and at every price change | 16 CFR Part 453 | Owner |
| Test calls and statement sample | Quarterly (our practice) | 16 CFR Part 453 | Manager |
| Preneed deposit log check | Monthly (our practice) | State preneed law | Office manager |
| Preneed reconciliation | Annually (our practice) | Preneed Reconciliation Ladder | Owner with accountant |
| Formaldehyde monitoring | Initial, then every 6 months at or above action level | 29 CFR 1910.1048 | Prep room lead |
| Formaldehyde and bloodborne pathogen training | At least annually | 29 CFR 1910.1048 and 1910.1030 | Prep room lead |
| Exposure control plan review | At least annually | 29 CFR 1910.1030 | Owner |
| Crematory permit conditions and logs | As the permit requires | State air rules | Crematory operator |
Before a state inspection, walk the building with our inspection readiness guide and check refrigeration, decedent tracking, and posted licenses against this calendar.
Preneed shortfall estimator
Re-prices guaranteed-price contracts at today’s cost and compares them to the money actually set aside. Rung 4–5 of the Preneed Reconciliation Ladder.
From current trust statements and insurer confirmations.
Leave at 100 to compare to full retail; some buyers measure against cost to deliver.
Educational estimate only. Not an appraisal, valuation opinion, or loan approval.
Frequently asked questions
How often should a funeral home review its General Price List?
Whenever any price changes, and in any case on a fixed annual date. Each revision needs a new effective date, and the old list must be kept for at least a year after it was last handed out. Many owners pair the annual review with a check that the casket and outer burial container lists match the selection room.
Does a small funeral home with one embalmer need OSHA programs?
Yes. The formaldehyde and bloodborne pathogen standards apply based on employee exposure, not firm size. If an employee embalms or handles remains, expect to need exposure monitoring, a written exposure control plan, offered hepatitis B vaccination, training, and records. Owners who embalm alone with no employees should ask counsel how the rules apply to them.
Who is responsible for compliance if the owner is not a licensed director?
The owner is responsible for the business, and many states also hold the designated funeral director in charge accountable for compliance at the establishment. In Texas, for example, statute makes that person ultimately responsible for compliance with mortuary law. Non-licensed owners should give that director the authority and time the role requires.
What compliance records do buyers ask for first when a funeral home is for sale?
Usually the preneed register with trust and insurer statements, every price list used in the past year, a sample of signed statements, license copies, and any regulator inspection reports or complaints. Crematory permits and OSHA monitoring results follow. A firm that keeps this checklist current can produce all of it in days rather than weeks.
Sources cited
- 16 CFR Part 453: Funeral Industry Practices — eCFR / Federal Trade Commission
- Complying with the Funeral Rule — Federal Trade Commission
- 29 CFR 1910.1048, Formaldehyde — Electronic Code of Federal Regulations
- 29 CFR 1910.1030, Bloodborne pathogens — Electronic Code of Federal Regulations
- Texas Occupations Code Chapter 651, Funeral Directors, Embalmers, Crematories — Texas Legislature
- Air Permit by Rule: Non-commercial Incinerators and Crematories (30 TAC §106.494) — Texas Commission on Environmental Quality