Which of the following statements about a funeral trust is incorrect?

A funeral trust is a financial arrangement designed to cover funeral expenses, and it typically exhibits specific characteristics governed by state laws. The assertion that a funeral trust can be revocable is key to understanding its flexibility and use.

When a funeral trust is established, it usually serves the purpose of pre-funding funeral services, ensuring that the necessary funds are available at the time of need. Most often, these trusts are set up as irrevocable to protect the assets from being counted as part of the beneficiary’s estate for Medicaid eligibility. However, the option for a funeral trust to be revocable may exist under certain legal frameworks, but it is not a common or standard practice due to concerns regarding the original intent of securing funds specifically for funeral arrangements.

Understanding the other statements provides additional context. A financial institution is typically mandated to manage the trust for oversight and regulatory compliance. The idea of having only one settlor may streamline the process but does not inherently reflect the broader possibilities of trust arrangements, where multiple contributors could technically establish a joint fund. Lastly, the requirement of an accompanying contract ensures that the terms of the funeral trust are clear and legally binding, protecting both the settlor's intentions and the service provider’s obligations.

Therefore, the statement regarding the revoc