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

12 Months Ended

Dec. 31, 2018

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
	2018	2017
Cash and cash equivalents	$ 1,557,506	$ 997,498
Fixed maturity securities, held to maturity, at amortized cost	990,390	943,211
Equity securities, at estimated fair value	483,353	682,315
Participating interests in mortgage loans held for investment with Security National Life	-	4,128
Real estate	1,304,620	1,996,411
Note receivables from Cottonwood Mortuary
Singing Hills Cemetery and Memorial Estates
eliminated in consolidation	1,606,155	1,667,621
Total cemetery perpetual care trust investments	5,942,024	6,291,184
Cemetery perpetual care obligation	(3,821,979)	(3,710,740)
Trust investments in excess of trust obligations	$ 2,120,045	$ 2,580,444

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
	2018	2017
Cash and cash equivalents (1)	$ 7,179,225	$ 8,188,764
Mutual funds, at estimated fair value	677,795	715,952
Fixed maturity securities, held to maturity, at amortized cost	1,258,397	1,130,088
Equity securities, at estimated fair value	66,878	94,006
Participating interests in mortgage loans held for investment with Security National Life	1,799,267	1,701,811
Total	$ 10,981,562	$ 11,830,621

(1) Including cash and cash equivalents of $5,668,580 and $6,392,283 as of December 31, 2018 and 2017, respectively, for the life insurance and mortgage segments.

A surplus note receivable in the amount of $4,000,000 at December 31, 2018 and 2017, from Security National Life, was eliminated in consolidation.

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