MADISON, Wis. — People who paid into the Wisconsin Funeral Trust to have their funeral expenses covered might be spared the effects of failed investments that have left the trust millions of dollars in debt, under the terms of a proposed new settlement.

The fund collected money from about 10,000 people who wanted to be sure their funeral costs would be fully covered. The fund was marketed as a safe investment vehicle but its money managers poured the cash into high-risk investments that lost money — so the fund that's supposed to have $70 million on hand has only $48 million.

Most funeral directors who sold the investments have been honoring those contracts, even if it meant losing money. A separate agreement filed in court Wednesday would continue that practice.

The main settlement would protect consumers who paid into the trust by making sure they get full value, and funeral homes would be "fairly compensated" for their services," said John Wirth, the court-appointed receiver of the trust.

"All consumers whose funds were deposited in the trust will receive the funeral, burial merchandise and services called for in their burial agreement," Wirth said. "A funeral home that signs the settlement will completely fulfill the contract first, and seek payment from the trust in stages."

Funeral directors that participated in the trust aren't obligated to join the settlement, but those who opt out won't be protected from any possible litigation.

If a Dane County judge approves the settlement, participating funeral homes would have until Sept. 30 to sign on. Currently, the trust reimburses funeral homes about 60 percent of the balance of a customer's account. If the total trust gains value, those funeral homes could see additional reimbursement retroactively.

Wirth said the trust might also be able to recover funds from the money managers who mishandled the account. He said litigation was a possibility but also noted that the trust was close to finalizing "a couple of rather significant settlements" with some of the money managers.

If the negotiations do succeed in collecting from those managers, most of the money would go toward the funeral directors who have been covering the costs of burials for people who bought into the fund.

The proposed settlement was signed by the receiver and the Wisconsin Funeral Directors Association.

Chris Stroebel, the attorney for the funeral directors' group, said the proposed settlement formalizes what a majority of funeral directors were already doing: standing by their customers.