8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets

12 Months Ended

Dec. 31, 2019

Notes

8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets

8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets 

State law requires the Company to pay into endowment care trusts a portion of the proceeds from the sale of certain cemetery property interment rights for cemeteries that have established an endowment care trust. These endowment care trusts are defined as variable interest entities pursuant to GAAP. Also, management has determined that the Company is the primary beneficiary of these trusts, as it absorbs both a majority of the losses and returns associated with the trusts. The Company has consolidated cemetery endowment care trust investments with a corresponding amount recorded as Cemetery Perpetual Care Obligation in the accompanying consolidated balance sheets.

The components of the cemetery perpetual care investments and obligation are as follows:

	December 31
	2019	2018
Cash and cash equivalents	$     1,306,740	$     1,557,506
Fixed maturity securities, available for sale, at estimated fair value	975,673	990,390
Equity securities, at estimated fair value	1,605,451	483,353
Commerical mortgage loans held for investment	524,000	-
Real estate held for investment	-	1,304,620
Note receivables from Cottonwood Mortuary, Singing Hills
Cemetery and Memorial Estates eliminated in consolidation	1,541,120	1,606,155
Total cemetery perpetual care trust investments	5,952,984	5,942,024
Cemetery perpetual care obligation	(3,933,719)	(3,821,979)
Trust investments in excess of trust obligations	$     2,019,265	$     2,120,045

The Company has also established certain restricted assets to provide for future merchandise and service obligations incurred in connection with its pre-need sales for its cemetery and mortuary segment.

Restricted cash also represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction development projects. Additionally, the Company elected to fund its medical benefit safe-harbor limit based on 35% of the qualified direct costs for the preceding year, and has included this amount as a component of restricted cash. These restricted cash items are for the Company’s life insurance and mortgage segments.

Restricted assets are summarized as follows:

	December 31
	2019	2018
Cash and cash equivalents (1)	$     8,674,214	$     7,179,225
Mutual funds, at estimated fair value	-	677,795
Fixed maturity securities, available for sale, at estimated fair value	1,008,867	1,258,397
Equity securities, at estimated fair value	1,976,480	66,878
Participating interests in mortgage loans held for investment   with Security National Life	2,275,756	1,799,267
Total	$   13,935,317	$   10,981,562
(1) Including cash and cash equivalents of $7,170,092 and $5,668,580 as of December 31, 2019 and 2018, respectively, for the life insurance and mortgage segments.

A surplus note receivable in the amount of $4,000,000 at December 31, 2019 and 2018, from Security National Life, was eliminated in consolidation.

See Notes 1 and 17 for additional information regarding restricted assets.