Which condition would trigger the establishment of a preneed trust?

• A. The property or merchandise is not immediately required
• B. The property or merchandise is less than $180
• C. The property or merchandise is for out of state
• D. The property or merchandise is not taxable

Answer: (D)

Preneed trusts exist to safeguard funds paid in advance for funeral goods or services that will be delivered in the future, isolating those funds from ordinary business assets so they are dedicated to the specific contract and available to fulfill it.

In this context, the condition that triggers establishing a preneed trust is when the property or merchandise is not taxable. When the item is not subject to sales tax, the arrangement is treated as a prepaid contract that requires funds to be held in a dedicated trust to protect the buyer and ensure the specified goods or services will be provided. The other scenarios described—the item being needed immediately, the amount being under a certain threshold, or the item being out of state—do not describe the regulatory trigger for setting up a preneed trust in this item.