Perpetual care fund: how a cemetery's care trust works and what it means at sale

A family that buys a grave expects someone to mow around it a hundred years from now, long after the cemetery’s current owner is gone. The perpetual care fund is how the law tries to keep that promise. For anyone buying or selling a funeral home that comes with a cemetery, it is also the account most likely to hide a liability nobody priced.

What does a perpetual care fund hold, and who owns it?

It holds the deposits state law requires from interment-right sales, plus investment growth that is retained. A trustee holds it for the cemetery’s upkeep; the owner benefits from the income but cannot spend the principal.

States use different names: perpetual care, endowment care, permanent maintenance, or permanent endowment care. The structure is similar. Montana’s statute is typical in tone: under MCA §37-19-822, at least 15% of each sale of a lot, grave space, crypt, niche, or burial right goes in, the principal is “inviolate,” and only net income may be used for care.

That is why owners should think of the fund as pre-paid maintenance, not as savings. The cemetery owns the obligation to keep the grounds; the trust owns the money set aside to help pay for it.

Not every cemetery has a fund, and not every fund is held to the statutory minimum. North Carolina lets a cemetery advertise perpetual care only if it deposits at least the greater of $100 or 10% of the retail price per grave, niche, or crypt. Colorado requires cemeteries established or acquired after July 1, 1965, within 20 miles of a city of 5,000 or more, to be organized as endowment care cemeteries. Georgia’s rule sets the deposit at the greatest of the statutory amount, the trust agreement, or what was represented to the purchaser. So the first diligence question is what the cemetery is legally, and what its sales materials have promised.

How much goes into the fund on each sale?

A percentage of the sale price or a fixed amount per space, set by statute, due within a set window after the purchaser pays in full. The rates differ more than most owners expect.

Maine’s perpetual care statute sits at the high end, and Kentucky’s KRS §367.952 makes the fund irrevocable and requires a $20,000 to $50,000 initial deposit for new cemeteries, depending on county population. Hawaii and Nebraska use fixed amounts instead, such as $1 per square foot of interment space in Hawaii and at least $100 per lot in Nebraska. For other states, check the state pages or the cemetery statute directly.

How does the fund appear in the financial statements?

Off the revenue line. The deposit portion of each sale is not income to the cemetery; only the trust’s distributions are.

Service Corporation International’s fiscal 2025 Form 10-K shows how a public company handles it. The portion of interment-right proceeds that state or provincial law requires to go into perpetual care trusts “is not recognized as revenue.” SCI carried $2.40 billion of cemetery perpetual care trust investments at Dec. 31, 2025, against $2.38 billion of “care trusts’ corpus” on the liability side. It recognized $111.1 million of perpetual care trust income in 2025. The principal “generally cannot be withdrawn,” though certain states allow a total-return distribution that may include capital appreciation and principal.

Small cemeteries often book the whole sale as revenue and the deposit as an expense, or skip the entry entirely. Either way, a buyer’s accountant will restate it. Our guide to funeral home accounting setup covers how to keep trust money separate in the chart of accounts.

How do you verify a perpetual care fund before closing?

Rebuild what should have been deposited, compare it with what the trustee actually received, and confirm the regulator agrees.

Trustee fees and investment returns deserve their own look. The issues mirror those in our guide to preneed trust investments and fees, even though the money is held for maintenance rather than for future funerals.

What questions do sellers, buyers, and lenders ask of the fund?

They ask three different questions of the same balance.

Sellers should ask whether every required deposit was made on time. A seller who finds and cures a gap before marketing turns a negotiating point into a footnote. Put the reconciliation on your compliance checklist a year before you plan to sell.

Buyers ask whether the fund’s income will cover the real cost of care once lots stop selling. When it will not, the shortfall becomes a permanent operating cost. The full sell-out analysis is in our guide to evaluating a cemetery in a combination acquisition.

Lenders ask whether anyone is counting the fund as collateral or liquidity. It is neither. They also want to know whether a change-of-control approval could delay closing. In Michigan, MCL §456.532 requires the cemetery commissioner’s prior approval and holds the principal of the endowment and perpetual care trust in escrow for 6 months after the later of approval, closing, or title transfer.

What mistakes do owners make with perpetual care funds?

Most mistakes come from treating the fund as the owner’s money or as somebody else’s problem.

• Counting the balance as a business asset. It is restricted to maintenance; a buyer will exclude it from working capital and from value.
• Depositing on the wrong trigger. Some states key the deposit to final payment, others to receipt or quarter-end. Mixing them up creates gaps that compound.
• Leaving the income-versus-cost question unasked. A fund can be fully deposited and still be too small to maintain the grounds without sales.
• Assuming the fund moves automatically. Change-of-control approvals and escrows can sit on the critical path, as Michigan’s rule shows.
• Ignoring combination restrictions. In some states the funeral home cannot own the cemetery at all; see our definition of a combination operation.

Sellers preparing a funeral home and cemetery together should also read our guide to selling a funeral home with a cemetery. For more operating steps that raise value before a sale, start at the operations hub.