House File 442 - Introduced HOUSE FILE BY PETTENGILL Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to requirements for trust fund deposits of 2 prepayments for cemetery and funeral merchandise, and funeral 3 services. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1156HH 82 6 av/je/5 PAG LIN 1 1 Section 1. Section 523A.201, subsections 2 and 3, Code 1 2 2007, are amended to read as follows: 1 3 2. If a seller agrees to furnish cemetery merchandise, 1 4 funeral merchandise, funeral services, or a combination 1 5 thereof and performance or delivery may be more than one 1 6 hundred twenty days following the initial payment on the 1 7 account, a minimum ofeightyninety=five percent of all 1 8 payments made under the purchase agreement shall be placed and 1 9 remain in trust until the person for whose benefit the funds 1 10 were paid dies. 1 11 3. If a purchase agreement for cemetery merchandise, 1 12 funeral merchandise, funeral services, or a combination 1 13 thereof provides that payments are to be made in installments, 1 14 the seller shall depositeightyninety=five percent of each 1 15 payment in the trust fund until the full amount required to be 1 16 placed in trust has been deposited. If the purchase agreement 1 17 is financed with or sold to a financial institution, the 1 18 purchase agreement shall be considered paid in full and the 1 19 trust requirements shall be satisfied within fifteen days 1 20 after the close of the month in which the seller receives 1 21 funds from the financial institution. 1 22 Sec. 2. Section 523A.405, subsection 8, Code 2007, is 1 23 amended to read as follows: 1 24 8. The amount of the surety bond shall equaleighty1 25 ninety=five percent of the payments received pursuant to 1 26 purchase agreements, or the applicable portion thereof, for 1 27 cemetery merchandise, funeral merchandise, funeral services, 1 28 or a combination thereof and the amount needed to adjust the 1 29 amount of the surety bond for inflation as set by the 1 30 commissioner based on the consumer price index. The seller 1 31 shall review the amount of the surety bond no less than 1 32 annually and shall increase the bond as necessary to reflect 1 33 additional payments. The amount needed to adjust for 1 34 inflation shall be added annually to the surety bond during 1 35 the first quarter of the establishment's fiscal year. 2 1 Sec. 3. Section 523A.811, subsection 1, paragraph c, Code 2 2 2007, is amended to read as follows: 2 3 c. The amount of funds currently held in trust for 2 4 cemetery merchandise, funeral merchandise, and funeral 2 5 services is less thaneightyninety=five percent of all 2 6 payments made under the purchase agreements referred to in 2 7 section 523A.201. 2 8 EXPLANATION 2 9 This bill relates to the requirements for trust fund 2 10 deposits of prepayments for cemetery and funeral merchandise, 2 11 and funeral services. 2 12 Code section 523A.201 is amended to require that a minimum 2 13 of 95 percent of such payments made under a purchase agreement 2 14 must be placed in trust until the person for whose benefit the 2 15 funds were paid dies, and that 95 percent of each installment 2 16 payment made under such a purchase agreement must be placed in 2 17 trust until the full amount required to be placed in trust has 2 18 been deposited. Currently, only 80 percent of such payments 2 19 must be placed in trust. 2 20 Code section 523A.811 is amended to require the insurance 2 21 commissioner to notify the attorney general of the need for 2 22 establishment of a receivership if a seller of cemetery and 2 23 funeral merchandise, and funeral services, has placed in trust 2 24 less than 95 percent of the payments referred to in Code 2 25 section 523A.201. 2 26 LSB 1156HH 82 2 27 av:nh/je/5