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PAG LIN
1 1 SUBCHAPTER 1
1 2 SHORT TITLE AND DEFINITIONS
1 3 Section 1. NEW SECTION. 523A.101 SHORT TITLE.
1 4 This chapter may be cited as the "Iowa Cemetery and Funeral
1 5 Merchandise and Funeral Services Act".
1 6 Sec. 2. NEW SECTION. 523A.102 DEFINITIONS.
1 7 For purposes of this chapter, unless the context otherwise
1 8 requires:
1 9 1. "Authorized to do business within this state" means a
1 10 person licensed, registered, or subject to regulation by an
1 11 agency of the state of Iowa or who has filed a consent to
1 12 service of process with the commissioner for purposes of this
1 13 chapter.
1 14 2. "Beneficiary" means any natural person specified or
1 15 included in a purchase agreement, upon whose future death
1 16 cemetery merchandise, funeral merchandise, funeral services,
1 17 or a combination thereof are to be provided under the purchase
1 18 agreement.
1 19 3. "Burial account" means an account established by a
1 20 person with a financial institution for the purpose of funding
1 21 the future purchase of cemetery merchandise, funeral
1 22 merchandise, or a combination thereof without any related
1 23 trust agreement.
1 24 4. "Burial trust fund" means an irrevocable burial trust
1 25 fund established by a person with a financial institution for
1 26 the purpose of funding the future purchase of cemetery
1 27 merchandise, funeral merchandise, funeral services, or a
1 28 combination thereof upon the death of the person named in the
1 29 burial trust fund's records or a related purchase agreement.
1 30 "Burial trust fund" does not include or imply the existence of
1 31 any oral or written purchase agreement for cemetery
1 32 merchandise, funeral merchandise, funeral services, or a
1 33 combination thereof between the person and a seller.
1 34 5. "Cemetery merchandise" means foundations, grave
1 35 markers, tombstones, ornamental merchandise, memorials, and
2 1 monuments sold under a purchase agreement that does not
2 2 require installation within twelve months of the purchase.
2 3 6. "Commissioner" means the commissioner of insurance or
2 4 the deputy administrator authorized in section 523A.801 to the
2 5 extent the commissioner delegates functions to the deputy
2 6 administrator.
2 7 7. "Common business enterprise" means a group of two or
2 8 more business entities that share common ownership in excess
2 9 of fifty percent.
2 10 8. "Credit sale" means a sale of goods, services, or an
2 11 interest in land in which all of the following are applicable:
2 12 a. Credit is granted either under a seller credit card or
2 13 by a seller who regularly engages as a seller in credit
2 14 transactions of the same kind.
2 15 b. The buyer is a person other than an organization.
2 16 c. The goods, services, or interest in land are purchased
2 17 primarily for a personal, family, or household purpose.
2 18 d. Either the debt is payable in installments or a finance
2 19 charge is made.
2 20 e. For goods and services, the amount financed does not
2 21 exceed twenty-five thousand dollars.
2 22 9. "Delivery" occurs when:
2 23 a. The cemetery merchandise, funeral merchandise, or the
2 24 title document establishing an easement for burial rights is
2 25 physically delivered to the purchaser or installed, except
2 26 that burial of any item at the site of its ultimate use shall
2 27 not constitute delivery for purposes of this chapter.
2 28 b. If authorized by a purchaser under a purchase
2 29 agreement, cemetery merchandise has been permanently
2 30 identified with the name of the purchaser or the beneficiary
2 31 and delivered to a bonded warehouse or storage facility
2 32 approved by the commissioner and both title to the merchandise
2 33 and a warehouse receipt have been delivered to the purchaser
2 34 or beneficiary and a copy of the warehouse receipt has been
2 35 delivered to the establishment for retention in its files.
3 1 c. If authorized by a purchaser under a purchase
3 2 agreement, a polystyrene or polypropylene outer burial
3 3 container has been permanently identified with the name of the
3 4 purchaser or the beneficiary and delivered to a bonded
3 5 warehouse or storage facility approved by the commissioner and
3 6 both title to the merchandise and a warehouse receipt have
3 7 been delivered to the purchaser or beneficiary and a copy of
3 8 the warehouse receipt has been delivered to the establishment
3 9 for retention in its files.
3 10 10. "Doing business in this state" means issuing or
3 11 performing wholly or in part any term of a purchase agreement
3 12 executed within the state of Iowa.
3 13 11. "Establishment" means each business establishment that
3 14 advertises, sells, promotes, or offers cemetery merchandise,
3 15 funeral merchandise, funeral services, or a combination
3 16 thereof prior to the death of the person named or implied in a
3 17 purchase agreement.
3 18 12. "Financial institution" means a state or federally
3 19 insured bank, savings and loan association, credit union,
3 20 trust department thereof, or a trust company authorized to do
3 21 business within this state and which has been granted trust
3 22 powers under the laws of this state or the United States,
3 23 which holds funds under a trust agreement. "Financial
3 24 institution" does not include:
3 25 a. A seller.
3 26 b. Anyone employed by or directly involved with the seller
3 27 in the seller's cemetery merchandise, funeral merchandise, or
3 28 funeral services business.
3 29 13. "Funeral merchandise" means personal property used for
3 30 the final disposition of a dead human body, including but not
3 31 limited to clothing, caskets, vaults, urns, and interment
3 32 receptacles. "Funeral merchandise" does not include easements
3 33 for burial rights in a completed space or cemetery
3 34 merchandise.
3 35 14. "Funeral services" means services provided for the
4 1 final disposition of a dead human body, including but not
4 2 limited to services necessarily or customarily provided for a
4 3 funeral, or for the interment, entombment, or cremation of a
4 4 dead human body, or any combination thereof. "Funeral
4 5 services" does not include perpetual care or maintenance.
4 6 15. "Inner burial container" means a container in which
4 7 human remains are placed for burial or entombment. Where only
4 8 one container is used for burial or entombment, "inner burial
4 9 container" includes a container serving as a burial vault, urn
4 10 vault, grave box, grave liner, or lawn crypt.
4 11 16. "Insolvent" means the inability to pay debts as they
4 12 become due in the usual course of business.
4 13 17. "Interest or income" means unrealized net appreciation
4 14 or loss in the fair value of cemetery merchandise, funeral
4 15 merchandise, and funeral services trust assets for which a
4 16 market value may be determined with reasonable certainty, plus
4 17 the return in money or property derived from the use of trust
4 18 principal or income, net of investment losses, taxes, and
4 19 expenses incurred in the sale of trust assets, any cost of the
4 20 operation of the trust, and any annual audit fee. "Interest
4 21 or income" includes but is not limited to:
4 22 a. Rent of real or personal property, including sums
4 23 received for cancellation or renewal of a lease and any
4 24 royalties.
4 25 b. Interest on money lent, including sums received as
4 26 consideration for prepayment of principal.
4 27 c. Cash dividends paid on corporate stock.
4 28 d. Interest paid on deposit funds or debt obligations.
4 29 e. Gain realized from the sale of trust assets.
4 30 18. "Next of kin" means the surviving spouse and heirs at
4 31 law of the deceased.
4 32 19. "Nonguaranteed" means that the price of the
4 33 merchandise and services selected has not been fixed or
4 34 guaranteed and will be determined by existing prices at the
4 35 time the merchandise and services are delivered or provided.
5 1 20. "Outer burial container" means a container used for
5 2 the burial of human remains that is used exclusively to
5 3 surround or enclose an inner burial container and to support
5 4 the earth above the container, commonly known as a burial
5 5 vault, urn vault, grave box, or grave liner, but not including
5 6 a lawn crypt.
5 7 21. "Parent company" means a corporation that has a
5 8 controlling interest in an establishment.
5 9 22. "Person" means an individual, business, corporation,
5 10 trust, firm, partnership, association, or any other legal
5 11 entity.
5 12 23. "Personal representative" means a personal
5 13 representative as defined in section 633.3.
5 14 24. "Provider" means a person that provides funeral
5 15 services, funeral merchandise, or cemetery merchandise
5 16 purchased in a purchase agreement.
5 17 25. "Purchase agreement" means an agreement to furnish
5 18 cemetery merchandise, funeral merchandise, funeral services,
5 19 or a combination thereof when performance or delivery may be
5 20 more than one hundred twenty days following the initial
5 21 payment on the account.
5 22 26. "Purchaser" means a person who purchases cemetery
5 23 merchandise, funeral merchandise, funeral services, or a
5 24 combination thereof. The purchaser need not be a beneficiary
5 25 of the agreement.
5 26 27. "Seller" means a person doing business within this
5 27 state, including a person doing business within this state who
5 28 sells insurance, who advertises, sells, promotes, or offers to
5 29 furnish cemetery merchandise, funeral merchandise, funeral
5 30 services, or a combination thereof when performance or
5 31 delivery may be more than one hundred twenty days following
5 32 the initial payment on the account whether the transaction is
5 33 completed or offered in person, through the mail, over the
5 34 telephone, by the internet, or through any other means of
5 35 commerce. "Seller" includes any person performing any term of
6 1 a purchase agreement executed within this state, and any
6 2 person identified under a burial account as the provider of
6 3 cemetery merchandise, funeral merchandise, funeral services,
6 4 or a combination thereof.
6 5 SUBCHAPTER 2
6 6 ESTABLISHMENT OF TRUSTS, DEPOSIT, INVESTMENT,
6 7 AND REPORTING REQUIREMENTS
6 8 Sec. 3. NEW SECTION. 523A.201 ESTABLISHMENT OF TRUST
6 9 FUNDS.
6 10 Unless proceeding under section 523A.401, 523A.402, or
6 11 523A.403, a seller must establish a trust fund prior to
6 12 advertising, selling, promoting, or offering cemetery
6 13 merchandise, funeral merchandise, funeral services, or a
6 14 combination thereof in this state as follows:
6 15 1. The trust fund must be established at a financial
6 16 institution.
6 17 2. If a seller agrees to furnish cemetery merchandise,
6 18 funeral merchandise, funeral services, or a combination
6 19 thereof and performance or delivery may be more than one
6 20 hundred twenty days following the initial payment on the
6 21 account, a minimum of eighty percent of all payments made
6 22 under the purchase agreement shall be placed and remain in
6 23 trust until the person for whose benefit the funds were paid
6 24 dies.
6 25 3. If a purchase agreement for cemetery merchandise,
6 26 funeral merchandise, funeral services, or a combination
6 27 thereof provides that payments are to be made in installments,
6 28 the seller shall deposit eighty percent of each payment in the
6 29 trust fund until the full amount required to be placed in
6 30 trust has been deposited. If the purchase agreement is
6 31 financed with or sold to a financial institution, the purchase
6 32 agreement shall be considered paid in full and the trust
6 33 requirements shall be satisfied within fifteen days after the
6 34 close of the month in which the seller receives funds from the
6 35 financial institution.
7 1 4. A seller shall not invade the trust principal for any
7 2 purpose.
7 3 5. A seller who lacks insurance coverage which protects
7 4 against the loss of purchaser payments not placed in trust
7 5 within the time period required by this section and section
7 6 523A.202 shall not commingle these payments with any other
7 7 seller funds. A seller who lacks insurance coverage may use
7 8 one or more of the following methods to dispose of these
7 9 payments:
7 10 a. Deposit purchaser funds into an escrow account until
7 11 the required amount has been deposited into a trust account at
7 12 a financial institution.
7 13 b. Make a prior delivery or warehouse cemetery or funeral
7 14 merchandise or a combination thereof as provided by this
7 15 chapter.
7 16 c. Make a prior filing of a surety bond in lieu of
7 17 establishing a trust fund as required by this section.
7 18 d. Make a simultaneous, same-day deposit of the
7 19 purchaser's payments into the seller's bank account and the
7 20 required amount into the seller's trust fund.
7 21 6. Payments otherwise subject to this section are not
7 22 exempt merely because they are held in certificates of
7 23 deposit.
7 24 7. Commingling of trust funds with other funds of the
7 25 seller is prohibited.
7 26 8. Interest or income earned on amounts deposited in trust
7 27 shall remain in trust under the same terms and conditions as
7 28 payments made under the purchase agreement, except that the
7 29 seller may withdraw so much of the interest or income as
7 30 represents the difference between the amount needed to adjust
7 31 the trust funds for inflation as set by the commissioner based
7 32 on the consumer price index and the interest or income earned
7 33 during the preceding year not to exceed fifty percent of the
7 34 total interest or income on a calendar-year basis. The early
7 35 withdrawal of interest or income under this provision does not
8 1 affect the purchaser's right to a credit of such interest or
8 2 income in the event of a nonguaranteed price agreement,
8 3 cancellation, or nonperformance by the seller.
8 4 9. The commissioner may require amendments to a trust
8 5 agreement not in accord with the provisions of this chapter.
8 6 10. If a seller voluntarily or involuntarily ceases doing
8 7 business and the seller's obligation to provide merchandise or
8 8 services has not been assumed by another establishment holding
8 9 a current establishment permit, all trust funds, including
8 10 accrued interest or income, shall be repaid to the purchaser
8 11 within one hundred twenty days following the seller's
8 12 cessation of business or, in the event of circumstances where
8 13 a payment is not possible within one hundred twenty days, as
8 14 soon as is reasonably practicable.
8 15 Sec. 4. NEW SECTION. 523A.202 TRUST FUND DEPOSIT
8 16 REQUIREMENTS.
8 17 1. All funds held in trust pursuant to section 523A.201
8 18 shall be deposited in a financial institution, within fifteen
8 19 days after the close of the month a seller receives the funds.
8 20 The financial institution shall hold the funds for the
8 21 designated beneficiary until released.
8 22 2. All funds required to be deposited by the purchaser for
8 23 a purpose described in section 523A.201 shall be deposited
8 24 consistent with one of the following methods:
8 25 a. The payments shall be deposited directly into an
8 26 interest-bearing burial account in the purchaser's name.
8 27 b. The purchaser shall deposit payments directly into a
8 28 separate trust account in the purchaser's name. The account
8 29 may be made payable to the seller upon the death of the
8 30 purchaser or the designated beneficiary, provided that, until
8 31 death, the purchaser retains the exclusive power to hold,
8 32 manage, pledge, and invest the trust account funds and may
8 33 revoke the trust and withdraw the funds, in whole or in part,
8 34 at any time during the term of the agreement.
8 35 c. The purchaser or the seller shall deposit payments
9 1 directly into a separate trust account in the name of the
9 2 purchaser, as trustee, for the named beneficiary, to be held,
9 3 invested, and administered as a trust account for the benefit
9 4 and protection of the beneficiary. The depositor shall notify
9 5 the financial institution of the existence and terms of the
9 6 trust, including at a minimum, the name of each party to the
9 7 agreement, the name and address of the trustee, and the name
9 8 and address of the beneficiary. The account may be made
9 9 payable to the seller upon the beneficiary's death.
9 10 d. The payments shall be deposited in the name of the
9 11 trustee, as trustee, under the terms of a master trust
9 12 agreement and the trustee may invest, reinvest, exchange,
9 13 retain, sell, and otherwise manage the trust fund for the
9 14 benefit and protection of the named beneficiary.
9 15 3. The commissioner may by rule authorize other methods of
9 16 deposit upon a finding that such methods provide equivalent
9 17 safety of the principal and interest or income and the seller
9 18 lacks access to the proceeds prior to performance.
9 19 4. This section does not prohibit moving trust funds from
9 20 one financial institution to another.
9 21 Sec. 5. NEW SECTION. 523A.203 FINANCIAL INSTITUTION
9 22 TRUSTEE QUALIFICATION AND INVESTMENT REQUIREMENTS.
9 23 1. A financial institution may serve as a trustee if
9 24 granted those powers under the laws of this state or of the
9 25 United States. A financial institution acting as a trustee of
9 26 trust funds under this chapter shall invest the funds in
9 27 accordance with applicable law.
9 28 2. A financial institution acting as a trustee of trust
9 29 funds under this chapter has a fiduciary duty to make
9 30 reasonable investment decisions and to properly oversee and
9 31 manage the funds entrusted to it. The trustee shall use the
9 32 judgment and care under the circumstances then prevailing that
9 33 persons of prudence, discretion, and intelligence exercise in
9 34 the management of their own affairs, not in regard to
9 35 speculation but in regard to the permanent disposition of
10 1 their funds, considering the probable income as well as the
10 2 probable safety of their capital. The commissioner may take
10 3 enforcement action against a financial institution in its
10 4 capacity as trustee for a breach of fiduciary duty proven
10 5 under this chapter.
10 6 3. Moneys deposited under a master trust agreement may be
10 7 commingled by the financial institution for investment
10 8 purposes if each deposit includes a detailed listing of the
10 9 amount deposited in trust for each beneficiary and maintenance
10 10 of a separate accounting of each purchaser's principal,
10 11 interest, and income.
10 12 4. Subject to a master trust agreement, the seller may
10 13 appoint an independent investment adviser to advise the
10 14 financial institution about investment of the trust funds.
10 15 5. Subject to agreement between the parties, the financial
10 16 institution may receive a reasonable fee from the trust funds
10 17 for services rendered as trustee. The trust shall pay the
10 18 trust operation costs and any annual audit fees.
10 19 6. The seller or any officer, director, agent, employee,
10 20 or affiliate of the seller shall not serve as trustee. A
10 21 financial institution holding trust funds shall not do any of
10 22 the following:
10 23 a. Be owned, under the control of, or affiliated with a
10 24 seller.
10 25 b. Use any funds required to be held in trust under this
10 26 chapter or chapter 566A to purchase an interest in any
10 27 contract or agreement to which a seller is a party.
10 28 c. Otherwise invest, directly or indirectly, in a seller's
10 29 business operations.
10 30 Sec. 6. NEW SECTION. 523A.204 ESTABLISHMENT ANNUAL
10 31 REPORTING REQUIREMENTS.
10 32 1. An establishment shall file with the commissioner not
10 33 later than March 1 of each year an annual report on a form
10 34 prescribed by the commissioner containing all of the
10 35 following:
11 1 a. The seller's name and address and the name and address
11 2 of the establishment that will provide the cemetery
11 3 merchandise, funeral merchandise, funeral services, or a
11 4 combination thereof.
11 5 b. The balance of each trust account as of the end of the
11 6 preceding calendar year, identified by purchaser or
11 7 beneficiary name.
11 8 c. A report of any amounts withdrawn from the trust
11 9 account including the reason for each withdrawal.
11 10 d. A detailed listing of the insurance funding outstanding
11 11 at the end of the preceding calendar year, identified by the
11 12 name of the purchaser or the beneficiary.
11 13 e. A complete inventory of the cemetery merchandise,
11 14 funeral merchandise, or a combination thereof delivered in
11 15 lieu of trust fund requirements under section 523A.401,
11 16 including the following:
11 17 (1) The location of the merchandise.
11 18 (2) Merchandise serial numbers or warehouse receipt
11 19 numbers identified by the name of the purchaser or the
11 20 beneficiary.
11 21 (3) A verified statement of a certified public accountant
11 22 on a form prescribed by the commissioner that all of the
11 23 following have occurred:
11 24 (a) A physical inventory of the cemetery merchandise or
11 25 funeral merchandise has been conducted.
11 26 (b) Each item of that merchandise is in the seller's
11 27 possession at the specified location.
11 28 f. The purchaser and beneficiary names, the amount of each
11 29 purchase agreement made in the preceding year, and the date
11 30 the purchase agreement was made.
11 31 g. A summary of any purchase agreements converted from
11 32 trust-funded benefits to insurance-funded or annuity benefits
11 33 during the preceding year which shall include, as of the
11 34 conversion date, the following information, as well as
11 35 aggregated totals for each of the following categories of
12 1 information, if appropriate:
12 2 (1) Insured's name.
12 3 (2) Insured's policy number.
12 4 (3) Original prepaid purchase agreement amount.
12 5 (4) Amount paid in.
12 6 (5) Unpaid balance of the prepaid purchase agreement.
12 7 (6) Unpaid balance of the purchase agreement.
12 8 (7) Amount retained by the establishment.
12 9 (8) Amount applied to the purchase of the insurance policy
12 10 or annuity.
12 11 (9) Initial cash surrender value and initial death benefit
12 12 under the insurance policy.
12 13 The establishment shall include a notarized statement
12 14 attesting that the insurance policies or annuities have been
12 15 issued and funded on behalf of the purchasers listed in the
12 16 summary and that all notices required under this section have
12 17 been given.
12 18 h. A summary of any purchase agreements converted from
12 19 trust-funded benefits to a surety bond during the preceding
12 20 year which shall include, as of the conversion date, the
12 21 following information, as well as aggregated totals for each
12 22 of the following categories of information, if appropriate:
12 23 (1) Name of the purchaser and beneficiary.
12 24 (2) Original prepaid purchase agreement amount.
12 25 (3) Amount paid in.
12 26 (4) Unpaid balance of the prepaid purchase agreement.
12 27 (5) Unpaid balance of the purchase agreement.
12 28 (6) Amount retained by the establishment.
12 29 (7) Amount applied to the purchase of the surety bond.
12 30 (8) A description of the surety bond and the applicable
12 31 amount of coverage.
12 32 i. Any other information the commissioner deems necessary
12 33 for the administration of this chapter.
12 34 2. A person holding multiple establishment permits may
12 35 elect to file only one annual report after noting all
13 1 establishments on the report.
13 2 3. An establishment shall make a good faith effort to
13 3 complete the annual report. The establishment shall note on
13 4 the annual report any information not reasonably available to
13 5 the establishment as an exception or variance. Account
13 6 balances within twelve months of the date of the filing of the
13 7 annual report shall be accepted if the actual date of the
13 8 account balances is noted.
13 9 4. In lieu of the annual report form described in
13 10 subsection 1, the commissioner may authorize an establishment
13 11 to file a short form annual report on a form prescribed by the
13 12 commissioner. The short form annual report may incorporate by
13 13 reference information readily available to the establishment.
13 14 The commissioner may certify and decertify establishments
13 15 authorized to file the short form based upon:
13 16 a. The establishment's recordkeeping system.
13 17 b. The number of purchase agreements which the
13 18 establishment has sold that are subject to regulation under
13 19 chapter 523A.
13 20 c. The availability and accessibility of information at
13 21 the establishment for purchase agreements subject to
13 22 regulation.
13 23 d. Whether the establishment places one hundred percent of
13 24 funds received pursuant to its purchase agreements in trust.
13 25 e. The findings of the commissioner concerning audits and
13 26 consumer complaints.
13 27 The commissioner shall retain the authority to require
13 28 establishments permitted to file the short form annual report
13 29 to provide all of the information required in the annual
13 30 report form required by subsection 1 for audit purposes or
13 31 otherwise.
13 32 5. An establishment filing an annual report shall pay a
13 33 filing fee of ten dollars per purchase agreement sold during
13 34 the year covered by the report. The fee does not apply to any
13 35 of the following:
14 1 a. A purchase agreement where the beneficiary dies in the
14 2 same year the agreement was sold.
14 3 b. Any modifications or additions, such as payments, for
14 4 an existing purchase agreement sold in a previous year.
14 5 c. An additional agreement purchased and already reported
14 6 to the commissioner by the purchaser.
14 7 d. A purchase agreement canceled or revoked in the same
14 8 year it was sold.
14 9 All purchase agreement changes for which a filing fee is
14 10 not required must be reported to the commissioner on the
14 11 annual report for the year covered.
14 12 6. As part of the annual filing with the commissioner, an
14 13 establishment shall file an authorization for the commissioner
14 14 or a designee to investigate, audit, and verify all funds,
14 15 accounts, safe deposit boxes, and other evidence of
14 16 establishment trust funds held by or in a financial
14 17 institution.
14 18 7. Forms may be obtained at cost from the commissioner
14 19 upon request. The commissioner may accept annual reports
14 20 submitted in an electronic format, including but not limited
14 21 to computer diskettes.
14 22 8. Notwithstanding chapter 22, all records maintained by
14 23 the commissioner under this section shall be confidential and
14 24 shall not be made available for inspection or copying except
14 25 upon approval of the commissioner or the attorney general.
14 26 Sec. 7. NEW SECTION. 523A.205 FINANCIAL INSTITUTION
14 27 ANNUAL REPORTING REQUIREMENTS.
14 28 1. A financial institution shall file with the
14 29 commissioner not later than March 1 of each year an annual
14 30 report on a form prescribed by the commissioner showing all
14 31 funds deposited by an establishment under a trust agreement
14 32 during the previous year. Each report shall contain all
14 33 information requested.
14 34 2. Forms may be obtained from the commissioner upon
14 35 request. The commissioner may accept annual reports submitted
15 1 in an electronic format, including but not limited to computer
15 2 diskettes.
15 3 3. Notwithstanding chapter 22, all records maintained by
15 4 the commissioner under this section shall be confidential and
15 5 shall not be made available for inspection or copying except
15 6 upon approval of the commissioner or the attorney general.
15 7 Sec. 8. NEW SECTION. 523A.206 AUDITS.
15 8 1. The commissioner may make audits of the establishment
15 9 and of the records of a seller, at the times and in the scope
15 10 the commissioner determines. The audits may be made without
15 11 prior notice to the seller. The commissioner may copy all
15 12 records the commissioner feels are necessary to conduct the
15 13 audit. The commissioner may require an audit of a seller or
15 14 other person by a certified public accountant to verify
15 15 compliance with this chapter, implementing rules, or orders.
15 16 2. A seller or other person shall pay for the audit unless
15 17 the commissioner waives this requirement. The cost of an
15 18 audit involving multiple sellers or other persons shall be
15 19 prorated among them upon any reasonable basis as determined by
15 20 the commissioner. The accountant shall deliver the audit
15 21 report to the commissioner and to the seller or other persons.
15 22 3. The commissioner shall not make public the information
15 23 obtained in the course of an audit, except when a duty under
15 24 this chapter requires the commissioner to take action against
15 25 a seller or to cooperate with another enforcement or
15 26 regulatory agency, or except when the commissioner is called
15 27 as a witness in a civil or criminal proceeding.
15 28 SUBCHAPTER 3
15 29 DISBURSEMENT OF REMAINING BURIAL ACCOUNT FUNDS,
15 30 BURIAL TRUST FUNDS, AND INSURANCE OR ANNUITY PROCEEDS
15 31 UNDER THE REQUIREMENTS OF SECTION 249A.5
15 32 Sec. 9. NEW SECTION. 523A.301 DEFINITION.
15 33 As used in sections 523A.302 and 523A.303:
15 34 1. "Director" means the director of human services.
15 35 2. "Reasonable funeral and burial expenses" means an
16 1 amount not exceeding the average statewide cost reasonably
16 2 necessary for the funeral and burial of the deceased,
16 3 including embalming, an inner burial container, an outer
16 4 burial container, the purchase of interment rights, grave
16 5 openings, and cemetery merchandise, but not including travel
16 6 costs for members of the family to attend the funeral or
16 7 burial.
16 8 Sec. 10. NEW SECTION. 523A.302 IDENTIFICATION OF
16 9 MERCHANDISE AND SERVICE PROVIDER.
16 10 If a burial trust fund identifies, either in the trust fund
16 11 records or in a related purchase agreement, the seller who
16 12 will provide the cemetery merchandise, funeral merchandise,
16 13 funeral services or a combination thereof, the trust fund
16 14 records or the related purchase agreements must contain a
16 15 statement signed by an authorized representative of the seller
16 16 agreeing to furnish the cemetery merchandise, funeral
16 17 merchandise, funeral services, or a combination thereof upon
16 18 the death of the beneficiary. The burial trust fund shall not
16 19 identify a specific seller as payee unless the trust fund
16 20 records or the related purchase agreements, if any, contain
16 21 the signature of an authorized representative of the seller
16 22 and, if the agreement is for funeral services as defined in
16 23 chapter 156, the name of a funeral director licensed to
16 24 deliver those services. A person may enter into agreements
16 25 authorizing the establishment of more than one burial trust
16 26 fund and agreeing to furnish the applicable merchandise and
16 27 services.
16 28 Sec. 11. NEW SECTION. 523A.303 DISBURSEMENT OF REMAINING
16 29 FUNDS.
16 30 1. If funds remain in a nonguaranteed irrevocable burial
16 31 trust fund or from the proceeds of an insurance policy or
16 32 annuity made payable or assigned to the seller or a provider
16 33 after the payment of reasonable funeral and burial expenses in
16 34 accordance with the conditions and terms of the purchase
16 35 agreement for cemetery merchandise, funeral merchandise, or
17 1 funeral services, the seller shall comply with all of the
17 2 following:
17 3 a. The seller shall provide written notice by mail to the
17 4 director under subsection 2.
17 5 b. At least sixty days after mailing notice to the
17 6 director, the seller shall disburse any remaining funds from
17 7 the burial trust fund as follows:
17 8 (1) If within the sixty-day period the seller receives a
17 9 claim from the personal representative of the deceased, any
17 10 remaining funds shall be disbursed to the personal
17 11 representative, notwithstanding any claim by the director.
17 12 (2) If within the sixty-day period the seller has not
17 13 received a claim from the personal representative of the
17 14 deceased but receives a claim from the director, the seller
17 15 shall disburse the remaining funds up to the amount of the
17 16 claim to the director.
17 17 (3) Any remaining funds not disposed of pursuant to
17 18 subparagraphs (1) and (2) shall be disbursed to any person who
17 19 is identified as the next of kin of the deceased in an
17 20 affidavit submitted in accordance with subsection 5.
17 21 2. The notice mailed to the director shall meet all of the
17 22 following requirements and is subject to all of the following
17 23 conditions:
17 24 a. The notice shall be mailed with postage prepaid.
17 25 b. If the notice is sent by regular mail, the sixty-day
17 26 period for receipt of a response is deemed to commence three
17 27 days following the date of mailing.
17 28 c. If the notice is sent by certified mail, the sixty-day
17 29 period for receipt of a response is deemed to commence on the
17 30 date of mailing.
17 31 d. The notice shall provide all of the following
17 32 information:
17 33 (1) Current name, address, and telephone number of the
17 34 seller.
17 35 (2) Full name of the deceased.
18 1 (3) Date of the deceased's death.
18 2 (4) Amount of funds remaining in the burial trust fund.
18 3 (5) Statement that any claim by the director must be
18 4 received by the seller within sixty days after the date of
18 5 mailing of the notice.
18 6 e. A notice in substantially the following form complies
18 7 with this subsection:
18 8 "TO: THE DIRECTOR OF HUMAN SERVICES
18 9 FROM: (SELLER'S NAME, CURRENT ADDRESS, AND TELEPHONE
18 10 NUMBER)
18 11 YOU ARE HEREBY NOTIFIED THAT (NAME OF DECEASED), WHO HAD AN
18 12 IRREVOCABLE BURIAL TRUST FUND, HAS DIED, THAT FINAL PAYMENT
18 13 FOR CEMETERY MERCHANDISE, FUNERAL MERCHANDISE, AND FUNERAL
18 14 SERVICES HAS BEEN MADE, AND THAT (REMAINING AMOUNT) REMAINS IN
18 15 THE IRREVOCABLE BURIAL TRUST FUND.
18 16 THE ABOVE-NAMED SELLER MUST RECEIVE A WRITTEN RESPONSE
18 17 REGARDING ANY CLAIM BY THE DIRECTOR WITHIN SIXTY DAYS AFTER
18 18 THE MAILING OF THIS NOTICE TO THE DIRECTOR.
18 19 IF THE ABOVE-NAMED SELLER DOES NOT RECEIVE A WRITTEN
18 20 RESPONSE REGARDING A CLAIM BY THE DIRECTOR WITHIN SIXTY DAYS
18 21 AFTER THE MAILING OF THIS NOTICE, THE SELLER MAY DISPOSE OF
18 22 THE REMAINING FUNDS IN ACCORDANCE WITH SECTION 523A.303, CODE
18 23 OF IOWA."
18 24 3. Upon receipt of the seller's written notice, the
18 25 director shall determine if a debt is due the department of
18 26 human services pursuant to section 249A.5. If the director
18 27 determines that a debt is owing, the director shall provide a
18 28 written response to the seller within sixty days after the
18 29 mailing of the seller's notice. If the director does not
18 30 respond with a claim within the sixty-day period, any claim
18 31 made by the director shall not be enforceable against the
18 32 seller, the trust, or a trustee.
18 33 4. A personal representative who wishes to make a claim
18 34 shall send written notice of the claim to the seller. If the
18 35 seller does not receive any claim from a personal
19 1 representative within the sixty-day period provided for
19 2 response by the director regarding a claim, the claim of the
19 3 personal representative shall not be enforceable against the
19 4 seller, the trust, or a trustee.
19 5 5. Any person other than a personal representative or the
19 6 director claiming an interest in the remaining funds shall
19 7 submit an affidavit claiming an interest which provides the
19 8 following information:
19 9 a. Full name, current address, and telephone number of the
19 10 claimant.
19 11 b. Claimant's relationship to the deceased.
19 12 c. Name of any surviving next of kin of the deceased, and
19 13 the relationship of any named surviving next of kin.
19 14 d. That the claimant has no knowledge of the existence of
19 15 a personal representative for the deceased's estate.
19 16 6. The seller may retain not more than fifty dollars of
19 17 the remaining funds in the burial trust fund for the
19 18 administrative expenses associated with the requirements of
19 19 this section.
19 20 7. If the funds remaining in a burial trust fund are
19 21 disbursed under the requirements of this section, the seller,
19 22 the provider, the burial trust fund, and any trustee shall not
19 23 be liable to the director, the estate of the deceased, any
19 24 personal representative, or any other interested person for
19 25 the remaining funds and any lien imposed by the director shall
19 26 be unenforceable against the seller, the burial trust fund, or
19 27 any trustee.
19 28 SUBCHAPTER 4
19 29 TRUSTING ALTERNATIVES
19 30 Sec. 12. NEW SECTION. 523A.401 PURCHASE AGREEMENTS
19 31 FUNDED BY INSURANCE PROCEEDS.
19 32 1. A purchase agreement may be funded by insurance
19 33 proceeds derived from a new or existing insurance policy
19 34 issued by an insurance company authorized to do business and
19 35 doing business within this state.
20 1 2. Such funding may be in lieu of the trusting
20 2 requirements of this chapter when the purchaser assigns the
20 3 proceeds of an existing insurance policy.
20 4 3. Such funding may be in lieu of the trusting
20 5 requirements of this chapter when a new insurance policy is
20 6 purchased to fund the purchase agreement, with a face amount
20 7 equal to or greater than the current retail price of the
20 8 cemetery merchandise, funeral merchandise, and funeral
20 9 services to be delivered under the purchase agreement or, if
20 10 less, a face amount equal to the total of all payments to be
20 11 submitted by the purchaser pursuant to the purchase agreement.
20 12 4. The premiums of any new insurance policy shall be fully
20 13 paid within thirty days after execution of the purchase
20 14 agreement or, with respect to a purchase agreement that
20 15 provides for periodic payments, the premiums shall be paid
20 16 directly by the purchaser to the insurance company issuing the
20 17 policy.
20 18 5. The policy shall satisfy the following conditions:
20 19 a. Except as necessary and appropriate to satisfy the
20 20 requirements regarding burial trust funds under Title XIX of
20 21 the federal Social Security Act, the policy shall not be owned
20 22 by the establishment or irrevocably assigned, and any
20 23 designation of the establishment as a beneficiary shall not be
20 24 made irrevocable.
20 25 b. The policy shall provide that any assignment of
20 26 benefits is contingent upon the establishment's delivery of
20 27 cemetery merchandise, funeral merchandise, and funeral
20 28 services pursuant to a purchase agreement.
20 29 c. The policy shall have an increasing death benefit or
20 30 similar feature that provides some means for increasing the
20 31 funding as the cost of funeral and cemetery goods and services
20 32 increases.
20 33 6. With the written consent of the purchaser, an existing
20 34 prepaid purchase agreement with trust-funded benefits may be
20 35 converted to a prepaid purchase agreement with insurance-
21 1 funded benefits provided the establishment and the insurance
21 2 benefits comply with the following provisions:
21 3 a. The transfer of the trust funds to the insurance
21 4 company must be at least equal to the full sum required to be
21 5 deposited as trust principal under the trust-funded prepaid
21 6 purchase agreement plus all net earnings accumulated with
21 7 respect thereto, as of the transfer date. Commissions,
21 8 allowances, surrender charges or other forms of compensation
21 9 or expense loads, premium expense, administrative charges or
21 10 expenses, or policy fees shall not be deducted from the trust
21 11 funds transferred pursuant to the conversion.
21 12 b. The face amount of any insurance policy issued on an
21 13 individual must be no less than the amount of principal and
21 14 interest transferred for that individual to the insurance
21 15 company, and any supplemental insurance policy issued to cover
21 16 the unfunded portion of the purchase agreement must have a
21 17 face amount that is at least as great as the unfunded
21 18 principal balance. The face amount of the insurance purchased
21 19 shall not, under any circumstances, be less than the total of
21 20 all payments made by the purchaser pursuant to the agreement
21 21 plus all net earnings accumulated with respect thereto, as of
21 22 the transfer date.
21 23 c. The insurance policy shall not allow for contesting
21 24 coverage, limit death benefits in the case of suicide, refer
21 25 to physical examination, or otherwise operate as an exclusion,
21 26 limitation, or condition other than requiring submission of
21 27 proof of death or surrender of policy at the time the prepaid
21 28 purchase agreement is funded, matures, or is canceled, as the
21 29 case may be.
21 30 d. The establishment shall maintain a copy of any prepaid
21 31 trust-funded purchase agreement that was converted to a
21 32 prepaid insurance-funded purchase agreement and retain the
21 33 payment history records for each converted purchase agreement
21 34 prior to conversion until the cemetery merchandise, funeral
21 35 merchandise, and funeral services have been delivered.
22 1 7. The seller of a purchase agreement subject to this
22 2 chapter which is to be funded by insurance proceeds shall
22 3 obtain all permits required to be obtained and comply with all
22 4 reporting requirements under this chapter.
22 5 8. An insurance company issuing policies funding purchase
22 6 agreements subject to this chapter shall file an annual report
22 7 with the commissioner on a form prescribed by the
22 8 commissioner. The report shall list the applicable insurance
22 9 policies outstanding for each establishment. Computer
22 10 printouts may be submitted so long as each legibly provides
22 11 the same information required in the prescribed form.
22 12 Sec. 13. NEW SECTION. 523A.402 PURCHASE AGREEMENTS
22 13 FUNDED BY ANNUITY PROCEEDS.
22 14 1. A purchase agreement may be funded by proceeds derived
22 15 from a new or existing annuity issued by an insurance company
22 16 authorized to do business and doing business within this
22 17 state.
22 18 2. Such funding may be in lieu of the trust requirements
22 19 of this chapter when the purchaser assigns the proceeds of an
22 20 existing annuity.
22 21 3. Such funding may be in lieu of the trust requirements
22 22 of this chapter when a new annuity is purchased to fund the
22 23 purchase agreement, with a face amount equal to or greater
22 24 than the current retail price of the cemetery merchandise,
22 25 funeral merchandise, and funeral services to be delivered
22 26 under the purchase agreement or, if less, a face amount equal
22 27 to the total of all payments to be submitted by the purchaser
22 28 pursuant to the purchase agreement.
22 29 4. The premiums of any new annuity shall be fully paid
22 30 within thirty days after execution of the purchase agreement
22 31 or, with respect to a purchase agreement that provides for
22 32 periodic payments, the premiums shall be paid directly by the
22 33 purchaser to the insurance company issuing the annuity.
22 34 5. The annuity shall satisfy the following conditions:
22 35 a. Except as necessary and appropriate to satisfy the
23 1 requirements regarding burial trust funds under Title XIX of
23 2 the federal Social Security Act, the annuity shall not be
23 3 owned by the establishment or irrevocably assigned and any
23 4 designation of the establishment as a beneficiary shall not be
23 5 made irrevocable.
23 6 b. The annuity shall provide that any assignment of
23 7 benefits is contingent upon the establishment's delivery of
23 8 cemetery merchandise, funeral merchandise, and funeral
23 9 services pursuant to a purchase agreement.
23 10 c. The annuity shall have an increasing death benefit or
23 11 similar feature that provides some means for increasing the
23 12 funding as the cost of cemetery merchandise, funeral
23 13 merchandise, and funeral services increases.
23 14 6. With the written consent of the purchaser, an existing
23 15 prepaid purchase agreement with trust-funded benefits may be
23 16 converted to a prepaid purchase agreement with annuity-funded
23 17 benefits provided the establishment and the annuity benefits
23 18 comply with the following provisions:
23 19 a. The transfer of the trust funds to the insurance
23 20 company must be at least equal to the full sum required to be
23 21 deposited as trust principal under the trust-funded prepaid
23 22 purchase agreement plus all net earnings accumulated with
23 23 respect thereto, as of the transfer date. Commissions,
23 24 allowances, surrender charges or other forms of compensation
23 25 or expense loads, premium expense, administrative charges or
23 26 expenses, or fees shall not be deducted from the trust funds
23 27 transferred pursuant to the conversion.
23 28 b. The face amount of any annuity issued on an individual
23 29 must be no less than the amount of principal and interest
23 30 transferred for that individual to the insurance company, and
23 31 any supplemental annuity issued to cover the unfunded portion
23 32 of the purchase agreement must have a face amount that is at
23 33 least as great as the unfunded principal balance. The face
23 34 amount of the annuity purchased shall not, under any
23 35 circumstances, be less than the total of all payments made by
24 1 the purchaser pursuant to the agreement plus all net earnings
24 2 accumulated with respect thereto, as of the transfer date.
24 3 c. The annuity shall not allow for contesting coverage,
24 4 limit death benefits in the case of suicide, refer to physical
24 5 examination, or otherwise operate as an exclusion, limitation,
24 6 or condition other than requiring submission of proof of death
24 7 or surrender of the annuity at the time the prepaid purchase
24 8 agreement is funded, matures, or is canceled, as the case may
24 9 be.
24 10 d. The establishment shall maintain a copy of any prepaid
24 11 trust-funded purchase agreement that was converted to a
24 12 prepaid annuity-funded purchase agreement and retain the
24 13 payment history records for each converted purchase agreement
24 14 prior to conversion until the cemetery merchandise, funeral
24 15 merchandise, and funeral services have been delivered.
24 16 7. The seller of a purchase agreement subject to this
24 17 chapter which is to be funded by annuity proceeds shall obtain
24 18 all permits required to be obtained and comply with all
24 19 reporting requirements under this chapter.
24 20 8. An insurance company issuing annuities funding purchase
24 21 agreements subject to this chapter shall file an annual report
24 22 with the commissioner on a form prescribed by the
24 23 commissioner. The report shall list the applicable annuities
24 24 outstanding for each establishment. Computer printouts may be
24 25 submitted so long as each legibly provides the same
24 26 information required in the prescribed form.
24 27 Sec. 14. NEW SECTION. 523A.403 PURCHASE AGREEMENTS
24 28 FUNDED BY CERTIFICATES OF DEPOSIT.
24 29 1. A purchase agreement may be funded by proceeds derived
24 30 from a certificate of deposit in the name of the purchaser
24 31 made payable to the seller upon the purchaser's death.
24 32 2. The seller of a purchase agreement subject to this
24 33 chapter which is to be funded by a certificate of deposit
24 34 shall obtain all permits required to be obtained and comply
24 35 with all reporting requirements under this chapter,
25 1 implementing rules, and orders.
25 2 Sec. 15. NEW SECTION. 523A.404 MERCHANDISE DELIVERED TO
25 3 THE PURCHASER OR WAREHOUSED.
25 4 1. Trust requirements do not apply to payments for outer
25 5 burial containers made of either polystyrene or polypropylene
25 6 or cemetery merchandise delivered to the purchaser or stored
25 7 in an independent third-party storage facility not owned or
25 8 controlled by the seller when approved by the commissioner.
25 9 The seller or the storage facility must demonstrate that they
25 10 will do all of the following:
25 11 a. Issue a receipt of ownership in the name of the
25 12 purchaser and deliver it to the purchaser.
25 13 b. Insure the merchandise against loss.
25 14 c. Protect the merchandise against damage.
25 15 d. Transfer title to the purchaser.
25 16 e. Appropriately identify and describe the merchandise in
25 17 a manner that it can be distinguished from other similar
25 18 items.
25 19 f. Use a method of storage that allows for visual audits
25 20 of the merchandise.
25 21 g. Have adequate, computerized, recordkeeping systems in
25 22 place to identify, describe, and count each item in storage,
25 23 including the ownership of each item, and provide an aggregate
25 24 listing with numerical totals.
25 25 h. File a consent to be audited and inspected by the
25 26 commissioner.
25 27 i. Provide reports to the commissioner, annually, by an
25 28 independent certified public accountant, which shall include a
25 29 physical count of merchandise held in storage and a review of
25 30 information, including the seller's revenue and sales records,
25 31 as necessary to verify the adequacy of the number of items
25 32 held at the storage facility.
25 33 j. Satisfy the annual reporting requirements of section
25 34 523A.204.
25 35 2. Lawn crypts may be delivered in lieu of trusting. For
26 1 this purpose, delivery means installation in a grave owned by
26 2 the purchaser. The seller shall do all of the following:
26 3 a. Notify the administrator before the lawn crypts are
26 4 installed.
26 5 b. Identify the intended location of the lawn crypts
26 6 within the cemetery.
26 7 c. Provide documentation adequately demonstrating delivery
26 8 has occurred. Adequate documentation includes but is not
26 9 limited to photographs and third-party certifications.
26 10 3. Cemetery merchandise and funeral merchandise shall not
26 11 be deemed delivered to the purchaser or warehoused if the
26 12 merchandise is subject to a lien or security interest by any
26 13 party other than the seller.
26 14 4. An establishment is prohibited from requiring delivery
26 15 as a condition of the sale.
26 16 5. A seller shall provide services necessary for the
26 17 installation or burial of outer burial containers sold by the
26 18 seller. This subsection shall not require the seller to
26 19 provide for the opening or closing of the interment or
26 20 entombment space, unless the purchase agreement provides
26 21 otherwise.
26 22 Sec. 16. NEW SECTION. 523A.405 BOND IN LIEU OF TRUST
26 23 FUND.
26 24 1. In lieu of trust requirements, a seller may file with
26 25 the commissioner a surety bond issued by a surety company
26 26 authorized to do business and doing business within this
26 27 state. The bond must be conditioned upon the seller's
26 28 faithful performance of purchase agreements subject to this
26 29 chapter. The surety's liability extends to each such
26 30 agreement executed while the bond is in force and until
26 31 performance or recision of the purchase agreement. To the
26 32 extent expressly agreed to in writing by the surety, the
26 33 surety's liability extends to each such agreement subject to
26 34 this chapter executed prior to the time the bond was in force
26 35 and until performance or recision of the agreement. A
27 1 purchaser aggrieved by a breach of a condition of the bond
27 2 covering the purchaser's agreement may maintain an action
27 3 against the bond. If, at the time of the breach, the
27 4 purchaser is aware of the purchaser's rights under the bond
27 5 and how to file a claim against the bond, the surety shall not
27 6 be liable for any breach of condition unless the surety
27 7 receives notice of a claim within sixty days following
27 8 discovery of the acts, omissions, or conditions constituting
27 9 the breach of condition, except as otherwise provided in this
27 10 section. A surety bond shall not be canceled by a surety
27 11 except upon a written notice of cancellation given by the
27 12 surety to the commissioner by restricted certified mail, and
27 13 not prior to the expiration of sixty days after receipt of the
27 14 notice by the commissioner. The surety's liability shall
27 15 extend to each purchase agreement subject to this chapter
27 16 executed prior to cancellation of the surety bond until the
27 17 seller has complied with section 3.
27 18 2. If a seller becomes insolvent or otherwise ceases to
27 19 engage in business prior to or within sixty days after
27 20 cancellation of a bond, the seller shall be deemed to have
27 21 breached the bond conditions for outstanding agreements under
27 22 this chapter as of the day prior to cancellation of the bond.
27 23 The commissioner shall mail written notice by restricted
27 24 certified mail to the purchaser under each outstanding
27 25 purchase agreement of the seller that a claim against the bond
27 26 must be filed with the surety company within sixty days after
27 27 the mailing date of the notice. The surety shall cease to be
27 28 liable for all purchase agreements except those for which
27 29 claims are filed with the surety company within sixty days
27 30 after the date the commissioner mails the notices.
27 31 3. If a surety bond is canceled by a surety under any
27 32 conditions other than those specified in subsection 2, the
27 33 seller shall comply with all of the following:
27 34 a. The seller shall comply with the trust requirements of
27 35 section 523A.201 for all purchase agreements subject to this
28 1 chapter executed on or after the effective date of
28 2 cancellation of the surety bond. In the alternative, the
28 3 seller may submit a substitute surety bond meeting the
28 4 requirements of subsection 1, but the seller must comply with
28 5 section 523A.201 for any purchase agreements executed on or
28 6 after the effective cancellation date of the earlier surety
28 7 bond and prior to the effective date of the later surety bond.
28 8 b. Within sixty days after the effective cancellation date
28 9 of the surety bond, the seller shall submit to the
28 10 commissioner an undertaking by another surety company that a
28 11 substitute surety bond meeting the requirements of subsection
28 12 1 is in effect and that the liability of the substitute surety
28 13 bond extends to all outstanding purchase agreements of the
28 14 seller that were executed but not performed or extinguished
28 15 prior to the effective date of the substitute surety bond, or
28 16 the seller shall submit to the commissioner a financial
28 17 statement accompanied by an unqualified opinion based upon an
28 18 audit performed by a certified public accountant licensed in
28 19 this state certifying the total amount of outstanding
28 20 liabilities of the seller on purchase agreements subject to
28 21 this chapter and proof of deposit by the seller in trust under
28 22 section 523A.201 of either the amount specified in section
28 23 523A.201, including interest as set by the commissioner based
28 24 on the interest which would have been earned had the funds
28 25 been maintained in trust, with respect to all of those
28 26 outstanding purchase agreements or, where applicable, that
28 27 delivery of merchandise has been made in compliance with
28 28 section 523A.404. The surety may require such security as is
28 29 necessary to comply with this section. Upon compliance by the
28 30 seller with this paragraph, the surety company canceling the
28 31 surety bond shall cease to be liable with respect to any
28 32 outstanding purchase agreements of the seller except those
28 33 purchase agreements with respect to which a breach of
28 34 condition occurred prior to cancellation and for which timely
28 35 claims were filed.
29 1 4. Section 523A.202, and, to the extent it is applicable,
29 2 section 523A.206, apply to sellers whose purchase agreements
29 3 are covered by a surety bond maintained under this section,
29 4 and section 523A.202 continues to apply to any purchase
29 5 agreements of those sellers that are not covered by a surety
29 6 bond maintained under this section.
29 7 5. Upon receiving a notice of cancellation of a surety
29 8 bond, the commissioner shall notify the seller of the
29 9 requirements of this chapter resulting from cancellation of
29 10 the bond. The notice may be in the form of a copy of this
29 11 section and sections 523A.201 and 523A.202.
29 12 6. Upon receiving a notice of cancellation, unless the
29 13 seller has complied with the requirements of this section, the
29 14 attorney general shall seek an injunction to prohibit the
29 15 seller from making further purchase agreements subject to this
29 16 chapter. The attorney general shall commence an action to
29 17 attach and levy execution upon property of the seller when the
29 18 seller fails to perform a purchase agreement subject to this
29 19 chapter, to the extent necessary to secure compliance with
29 20 this chapter. The county attorney may bring criminal charges
29 21 under subchapter 7.
29 22 7. The surety under this section shall not be owned, under
29 23 the control of, or affiliated with the seller.
29 24 8. The amount of the surety bond shall equal eighty
29 25 percent of the payments received pursuant to purchase
29 26 agreements, or the applicable portion thereof, for cemetery
29 27 merchandise, funeral merchandise, funeral services, or a
29 28 combination thereof and the amount needed to adjust the amount
29 29 of the surety bond for inflation as set by the commissioner
29 30 based on the consumer price index. The seller shall review
29 31 the amount of the surety bond no less than annually and shall
29 32 increase the bond as necessary to reflect additional payments.
29 33 The amount needed to adjust for inflation shall be added
29 34 annually to the surety bond during the first quarter of the
29 35 establishment's fiscal year.
30 1 9. With the consent of the purchaser, an existing prepaid
30 2 purchase agreement with trust-funded benefits may be converted
30 3 to a prepaid purchase agreement funded by a surety bond
30 4 provided the establishment and the surety bond comply with the
30 5 following provisions:
30 6 a. The amount of the trust funds transferred to the surety
30 7 company must be at least equal to the full sum required to be
30 8 deposited as trust principal under the trust-funded prepaid
30 9 purchase agreement plus all net earnings accumulated with
30 10 respect thereto, as of the transfer date. Commissions,
30 11 allowances, surrender charges or other forms of compensation
30 12 or expense loads, premium expense, administrative charges or
30 13 expenses, or fees shall not be deducted from the trust funds
30 14 transferred pursuant to the conversion.
30 15 b. The face amount of the surety bond issued on an
30 16 individual must be no less than the amount of principal and
30 17 interest transferred for that individual to the surety
30 18 company, and any supplemental surety bond issued to cover the
30 19 unfunded portion of the purchase agreement must have a face
30 20 amount that is at least as great as the unfunded principal
30 21 balance. The face amount of the surety bond purchased shall
30 22 not, under the circumstances, be less than the total of all
30 23 payments made by the purchaser pursuant to the agreement plus
30 24 all net earnings accumulated with respect thereto, as of the
30 25 transfer date.
30 26 c. The establishment shall maintain a copy of any prepaid
30 27 trust-funded agreement that was converted to a prepaid
30 28 purchase agreement funded by a surety bond and retain the
30 29 payment history records for each converted purchase agreement
30 30 prior to conversion until the cemetery merchandise, funeral
30 31 merchandise, and funeral services have been delivered.
30 32 SUBCHAPTER 5
30 33 PERMIT REQUIREMENTS FOR SELLERS OF CEMETERY
30 34 MERCHANDISE, FUNERAL MERCHANDISE, FUNERAL SERVICES,
30 35 OR A COMBINATION THEREOF
31 1 Sec. 17. NEW SECTION. 523A.501 ESTABLISHMENT PERMITS.
31 2 1. A person shall not advertise, sell, promote, or offer
31 3 to furnish cemetery merchandise, funeral merchandise, funeral
31 4 services, or a combination thereof when performance or
31 5 delivery may be more than one hundred twenty days following
31 6 the initial payment on the account without an establishment
31 7 permit. Each establishment must have an establishment permit.
31 8 2. An application for an establishment permit shall be
31 9 filed on a form prescribed by the commissioner, be accompanied
31 10 by a fifty dollar filing fee, and include a copy of each
31 11 purchase agreement the person will use for sales of cemetery
31 12 merchandise, funeral merchandise, funeral services, or a
31 13 combination thereof.
31 14 3. The application shall contain:
31 15 a. The name and address of the establishment.
31 16 b. The name and address of any additional provider of
31 17 cemetery merchandise, funeral merchandise, funeral services,
31 18 or a combination thereof.
31 19 c. The name and address of each owner, officer, or other
31 20 official of the establishment, including when relevant the
31 21 chief executive officer and the members of the board of
31 22 directors.
31 23 d. A description of any common business enterprise or
31 24 parent company.
31 25 e. The types of cemetery merchandise, funeral merchandise,
31 26 funeral services, or a combination thereof to be sold.
31 27 f. The types of trust or trust alternatives utilized by
31 28 the establishment and a list of the financial institutions,
31 29 storage facilities, surety companies, and insurance companies
31 30 utilized by the establishment on a regular basis.
31 31 4. A permit holder shall inform the commissioner of
31 32 changes in the information required to be provided by
31 33 subsection 3 within thirty days of the change.
31 34 5. An establishment permit is not assignable or
31 35 transferable. A permit holder selling all or part of an
32 1 establishment shall cancel the permit and the purchaser shall
32 2 apply for a new permit in the purchaser's name within thirty
32 3 days of the sale.
32 4 6. The commissioner shall grant or deny a permit
32 5 application within thirty days after receipt, but the
32 6 commissioner's failure to act within that time period shall
32 7 not be deemed approval of the application. If the
32 8 commissioner does not grant the permit, the commissioner shall
32 9 notify the person in writing of the reasons for the denial.
32 10 The permit shall disclose on its face the permit holder's
32 11 employer or the establishment on whose behalf the applicant
32 12 will be making or attempting to make sales, the permit number,
32 13 and the expiration date.
32 14 7. An initial permit is valid for two years from the date
32 15 the application is filed. A permit may be renewed for two
32 16 years by filing the form prescribed by the commissioner under
32 17 subsection 2, accompanied by a ten dollar renewal fee.
32 18 Submission of purchase agreements is not required for renewals
32 19 unless the purchase agreements have been modified since the
32 20 last filing.
32 21 8. The commissioner may by rule create or accept a
32 22 multijurisdiction establishment permit. If the establishment
32 23 permit is issued by another jurisdiction, the rules shall
32 24 require the filing of an application or notice form and
32 25 payment of the applicable filing fee of fifty dollars for an
32 26 initial application and ten dollars for a renewal application.
32 27 The application or notice form utilized and the effective
32 28 dates and terms of the permit may vary from the provisions set
32 29 forth in subsections 2, 3, and 7.
32 30 Sec. 18. NEW SECTION. 523A.502 SALES PERMITS.
32 31 1. A person shall not advertise, sell, promote, or offer
32 32 to furnish cemetery merchandise, funeral merchandise, funeral
32 33 services, or a combination thereof when performance or
32 34 delivery may be more than one hundred twenty days following
32 35 initial payment on the account without a sales permit. A
33 1 permit holder must be an employee or agent of a person holding
33 2 an establishment permit who can deliver the cemetery
33 3 merchandise, funeral merchandise, funeral services, or a
33 4 combination thereof being sold. A person must have a sales
33 5 permit for each establishment at which the person works.
33 6 However, a person may apply for a sales permit covering
33 7 multiple establishments, if the establishments have common
33 8 ownership. The establishment permit holder is liable for the
33 9 acts of its employees and agents performed in advertising,
33 10 selling, promoting, or offering to furnish, upon the future
33 11 death of a person named or implied in a purchase agreement,
33 12 cemetery merchandise, funeral merchandise, funeral services,
33 13 or a combination thereof.
33 14 2. This chapter does not permit a person to practice
33 15 mortuary science without a license. A person holding a
33 16 current sales permit may advertise, sell, promote, or offer to
33 17 furnish a funeral director's services as an employee or agent
33 18 of a funeral establishment furnishing the funeral services
33 19 under chapter 156.
33 20 3. An application for a sales permit shall be filed on a
33 21 form prescribed by the commissioner and be accompanied by a
33 22 five dollar filing fee.
33 23 4. The application shall contain:
33 24 a. The name and address of the person.
33 25 b. The name and address of the person's employer and each
33 26 establishment on whose behalf the person will be advertising,
33 27 selling, promoting, or offering to furnish cemetery
33 28 merchandise, funeral merchandise, funeral services, or a
33 29 combination thereof.
33 30 c. The name and address of the provider who will provide
33 31 the cemetery merchandise, funeral merchandise, funeral
33 32 services, or a combination thereof if different from the
33 33 person's employer.
33 34 5. An initial permit expires one year from the date the
33 35 application is filed. The permit may be renewed for four
34 1 years by filing the form prescribed by the commissioner under
34 2 subsection 3, accompanied by a twenty dollar filing fee.
34 3 6. A permit holder shall inform the commissioner of
34 4 changes in the information required to be provided by
34 5 subsection 4 within thirty days of the change.
34 6 7. A sales permit is not assignable or transferable. A
34 7 permit holder selling all or part of a business shall cancel
34 8 the permit and the purchaser shall apply for a new permit in
34 9 the purchaser's name within thirty days of the sale.
34 10 8. The commissioner shall grant or deny a permit
34 11 application within thirty days after receipt, but the
34 12 commissioner's failure to act within that time period shall
34 13 not be deemed approval of the application. If the
34 14 commissioner does not grant the permit, the commissioner shall
34 15 notify the applicant in writing of the reasons for the denial.
34 16 9. The commissioner may by rule create or accept a
34 17 multijurisdiction sales permit. If the sales permit is issued
34 18 by another jurisdiction, the rules shall require the filing of
34 19 an application or notice form and payment of the applicable
34 20 filing fee of five dollars for each year. The application or
34 21 notice form utilized and the effective dates and terms of the
34 22 permit may vary from the provisions set forth in subsections 3
34 23 and 5.
34 24 Sec. 19. NEW SECTION. 523A.503 DENIAL, SUSPENSION,
34 25 REVOCATION, AND SURRENDER OF PERMITS.
34 26 1. The commissioner may, pursuant to chapter 17A, deny any
34 27 permit application or immediately suspend or revoke any permit
34 28 issued under this chapter for several reasons, including but
34 29 not limited to:
34 30 a. Committing a fraudulent act, engaging in a fraudulent
34 31 practice, or violating any provision of this chapter or, any
34 32 implementing rule or order issued under this chapter.
34 33 b. Violating any other state or federal law applicable to
34 34 the conduct of the applicant's or permit holder's business.
34 35 c. Insolvency or financial condition.
35 1 d. The permit holder, for the purpose of avoiding the
35 2 trust requirement for funeral services, attributes amounts
35 3 paid under the purchase agreement to cemetery merchandise or
35 4 funeral merchandise that is delivered under section 523A.404
35 5 rather than to funeral services sold to the purchaser. The
35 6 sale of funeral services at a lower price when the sale is
35 7 made in conjunction with the sale of cemetery merchandise or
35 8 funeral merchandise to be delivered under section 523A.404
35 9 than the services are regularly and customarily sold for when
35 10 not sold in conjunction with cemetery merchandise or funeral
35 11 merchandise is evidence that the permit holder is acting with
35 12 the purpose of avoiding the trust requirement for funeral
35 13 services under section 523A.201.
35 14 e. Engaging in a deceptive act or practice or deliberately
35 15 misrepresenting or omitting a material fact regarding the sale
35 16 of cemetery merchandise, funeral merchandise, funeral
35 17 services, or a combination thereof under this chapter.
35 18 f. Conviction of a criminal offense involving dishonesty
35 19 or a false statement.
35 20 g. Inability to provide the cemetery merchandise, funeral
35 21 merchandise, funeral services, or a combination thereof which
35 22 the applicant or permit holder purports to sell.
35 23 h. The applicant or permit holder sells the business
35 24 without filing a prior notice of sale with the commissioner.
35 25 The permit shall be revoked thirty days following such sale.
35 26 i. Selling by a person who is not an employee or agent of
35 27 the applicant or permit holder.
35 28 2. The commissioner may, for good cause shown, suspend any
35 29 permit for a period not exceeding thirty days, pending
35 30 investigation.
35 31 3. Except as provided in subsection 2, a permit shall not
35 32 be revoked or suspended except after notice and hearing under
35 33 chapter 17A.
35 34 4. Any permit holder may surrender a permit by delivering
35 35 to the commissioner written notice that the permit holder
36 1 surrenders the permit, but the surrender shall not affect the
36 2 permit holder's civil or criminal liability for acts committed
36 3 before the surrender.
36 4 5. Denial, revocation, suspension, or surrender of a
36 5 permit does not impair or affect the obligation of any
36 6 preexisting lawful agreement between the permit holder and any
36 7 person.
36 8 SUBCHAPTER 6
36 9 PURCHASE AGREEMENT REQUIREMENTS
36 10 Sec. 20. NEW SECTION. 523A.601 DISCLOSURES.
36 11 1. A purchase agreement for cemetery merchandise, funeral
36 12 merchandise, funeral services, or a combination thereof shall
36 13 be written in clear, understandable language, and shall be
36 14 printed or typed in an easy-to-read font, size, and style, and
36 15 shall:
36 16 a. Identify the seller, the salesperson's permit and
36 17 establishment name and permit number, the expiration date of
36 18 the salesperson's permit, the purchaser, and the person for
36 19 whom the cemetery merchandise, funeral merchandise, funeral
36 20 services, or a combination thereof is purchased, if other than
36 21 the purchaser.
36 22 b. Specify the cemetery merchandise, funeral merchandise,
36 23 funeral services, or a combination thereof, to be provided,
36 24 and the cost of each merchandise item or service.
36 25 c. State clearly the conditions upon which substitution
36 26 will be allowed.
36 27 d. State the total purchase price and the terms under
36 28 which it is to be paid.
36 29 e. State clearly whether the purchase agreement is a
36 30 guaranteed price agreement or a nonguaranteed price agreement.
36 31 A nonguaranteed price agreement shall contain in twelve point
36 32 bold-faced type an explanation of the consequences of such
36 33 agreement in substantially the following language:
36 34 THE PRICES OF MERCHANDISE AND SERVICES UNDER THIS AGREEMENT
36 35 ARE SUBJECT TO CHANGE IN THE FUTURE. ANY FUNDS PAID UNDER
37 1 THIS AGREEMENT ARE ONLY A DEPOSIT TO BE APPLIED, TOGETHER WITH
37 2 ACCRUED INCOME, TOWARD THE FINAL COSTS OF THE MERCHANDISE OR
37 3 SERVICES AGREED UPON. ADDITIONAL CHARGES MAY BE INCURRED WHEN
37 4 ADDITIONAL MERCHANDISE OR SERVICES OR BOTH ARE PROVIDED OR
37 5 WHEN PRICES HAVE INCREASED MORE THAN ACCRUED INCOME.
37 6 f. State that the purchase of the cemetery merchandise,
37 7 funeral merchandise, and funeral services is revocable and
37 8 specify the damages for cancellation, if any.
37 9 g. State clearly who has the authority to cancel, amend,
37 10 or revoke the purchase agreement to purchase cemetery
37 11 merchandise, funeral merchandise, and funeral services.
37 12 h. State clearly that the purchaser is entitled to rescind
37 13 the purchase agreement under terms and conditions specified by
37 14 section 523A.602.
37 15 i. Include an explanation of regulatory oversight by the
37 16 insurance division in twelve point bold-faced type, in
37 17 substantially the following language:
37 18 THIS AGREEMENT IS SUBJECT TO RULES ADMINISTERED BY THE IOWA
37 19 INSURANCE DIVISION. YOU MAY CALL THE INSURANCE DIVISION AT
37 20 (___) ________. WRITTEN INQUIRIES OR COMPLAINTS SHOULD BE
37 21 MAILED TO THE IOWA SECURITIES BUREAU, (STREET ADDRESS),
37 22 (CITY), IOWA (ZIP CODE).
37 23 2. A purchase agreement that is funded by a trust shall
37 24 also:
37 25 a. State the percentage of money to be placed in trust.
37 26 b. Explain the disposition of the income generated from
37 27 investments and include a statement of the purchaser's
37 28 responsibility for income taxes owed on the income if
37 29 applicable.
37 30 c. State that if, after all payments are made under the
37 31 conditions and terms of the purchase agreement for cemetery
37 32 merchandise, funeral merchandise, funeral services, or a
37 33 combination thereof, any funds remain in the nonguaranteed
37 34 irrevocable burial trust fund, the seller shall disburse the
37 35 remaining funds according to law.
38 1 d. State clearly the terms of the funeral and burial trust
38 2 agreement and whether it is revocable or irrevocable.
38 3 e. State clearly that the purchaser is entitled to
38 4 transfer the trust funding, insurance funding, or other trust
38 5 assets or select another establishment to receive the trust
38 6 funding, insurance funding, or any other trust assets.
38 7 f. State clearly who has the authority to amend or revoke
38 8 the trust agreement, if revocable, and who has the authority
38 9 to appoint successor trustees if the purchase agreement is
38 10 canceled.
38 11 3. The commissioner may adopt rules establishing
38 12 disclosure and format requirements to promote consumer
38 13 understanding of the merchandise and services purchased and
38 14 the available funding mechanisms for a purchase agreement
38 15 under this chapter.
38 16 4. A purchase agreement shall be signed by the purchaser,
38 17 the seller, and if the agreement is for funeral services as
38 18 defined in chapter 156, a person licensed to deliver funeral
38 19 services.
38 20 5. The seller shall disclose the following information
38 21 prior to accepting the initial payment under a purchase
38 22 agreement:
38 23 a. The specific method or methods (trust deposits,
38 24 certificates of deposit, life insurance or an annuity, a
38 25 surety bond, or warehousing) that will be used to fund the
38 26 purchase agreement.
38 27 b. The relationship between the soliciting agent or
38 28 agents, the provider of the cemetery merchandise, funeral
38 29 merchandise, or funeral services, or combination thereof, the
38 30 commissioner, and any other person.
38 31 c. The relationship of the life insurance policy or other
38 32 trust assets to the funding of the purchase agreement and the
38 33 nature and existence of any guarantees regarding the purchase
38 34 agreement.
38 35 d. The impact on the purchase agreement of the following:
39 1 (1) Changes in the funding, including but not limited to
39 2 changes in the assignment, beneficiary designation, trustee,
39 3 or use of proceeds.
39 4 (2) Any penalties to be incurred by the purchaser as a
39 5 result of the failure to make any additional payments
39 6 required.
39 7 (3) Penalties to be incurred upon cancellation.
39 8 e. A list of cemetery merchandise, funeral merchandise,
39 9 and funeral services which are agreed upon under the purchase
39 10 agreement and all relevant information concerning the price of
39 11 the cemetery merchandise, funeral merchandise, funeral
39 12 services, or a combination thereof, including a statement that
39 13 the purchase price is either guaranteed at the time of
39 14 purchase or to be determined at the time of need.
39 15 f. All relevant information concerning what occurs and
39 16 whether any entitlements or obligations arise if there is a
39 17 difference between the funding and the amount actually needed
39 18 to fund the purchase agreement.
39 19 g. Any penalties or restrictions including but not limited
39 20 to geographic restrictions or the inability of the provider to
39 21 perform, upon delivery of cemetery merchandise, funeral
39 22 merchandise, or funeral services, or the purchase agreement
39 23 guarantee.
39 24 h. If the funding is being transferred from another
39 25 establishment, any material facts related to the revocation of
39 26 the prior purchase agreement and the transfer of the existing
39 27 trust funds.
39 28 Sec. 21. NEW SECTION. 523A.602 CONSUMER RECISION,
39 29 CANCELLATION, AND REFUND RIGHTS, AND PURCHASE AGREEMENT
39 30 COMPLIANCE WITH OTHER LAWS.
39 31 1. A seller shall furnish the purchaser with a completed
Text: SSB01199 Text: SSB01201 Text: SSB01200 - SSB01299 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
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