Preneed funds received by a licensed agent should be deposited in a __________ in the name of the designated trustee.

Preneed funds received by a licensed agent should be deposited in a trust instrument in the name of the designated trustee because this ensures that the funds are appropriately safeguarded for future funeral services as stipulated by law. A trust instrument is a legal arrangement that holds and manages assets on behalf of another party, ensuring that the money is used solely for its intended purpose, such as funding future funeral expenses.

This mechanism provides both security for the consumers who advance payment for services and legal compliance for the agents handling those funds. Utilizing a trust instrument also helps in maintaining clear records and accountability for management of the funds, which is crucial in the funeral industry to protect consumer rights and ensure ethical practices.

In contrast, while checking accounts, savings accounts, and investment funds could potentially hold funds, they do not inherently provide the same level of oversight and protection that a trust instrument does, nor do they specifically ensure the funds are set aside for a designated purpose in accordance with regulatory requirements. Therefore, understanding the specific role of a trust instrument in managing preneed funds is vital for compliance with funeral laws and regulations in Tennessee.