House File 5 



                                       HOUSE FILE       
                                       BY  PETTENGILL


    Passed House,  Date               Passed Senate, Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act requiring all payments for prepaid cemetery and funeral
  2    merchandise, and funeral services to be placed in trust or
  3    secured by a surety bond.
  4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  5 TLSB 1577YH 83
  6 av/nh/8

PAG LIN



  1  1    Section 1.  Section 523A.201, subsections 2 and 3, Code
  1  2 2009, 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 of eighty percent of all payments made
  1  8 under the purchase agreement shall be placed and remain in
  1  9 trust until the person for whose benefit the funds were paid
  1 10 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 deposit eighty percent of each payment all
  1 15 payments made under the purchase agreement in the trust fund
  1 16 until the full amount required to be placed in trust has been
  1 17 deposited.  If the purchase agreement is financed with or sold
  1 18 to a financial institution, the purchase agreement shall be
  1 19 considered paid in full and the trust requirements shall be
  1 20 satisfied within fifteen days after the seller receives funds
  1 21 from the financial institution.
  1 22    Sec. 2.  Section 523A.201, subsection 5, Code 2009, is
  1 23 amended by striking the subsection.
  1 24    Sec. 3.  Section 523A.405, subsection 8, Code 2009, is
  1 25 amended to read as follows:
  1 26    8.  The amount of the surety bond shall equal eighty
  1 27 percent the amount of the payments received pursuant to
  1 28 purchase agreements, or the applicable portion thereof, for
  1 29 cemetery merchandise, funeral merchandise, funeral services,
  1 30 or a combination thereof, and the amount needed to adjust the
  1 31 amount of the surety bond for inflation as set by the
  1 32 commissioner based on the consumer price index.  The seller
  1 33 shall review the amount of the surety bond no less than
  1 34 annually and shall increase the bond as necessary to reflect
  1 35 additional payments.  The amount needed to adjust for
  2  1 inflation shall be added annually to the surety bond during
  2  2 the first quarter of the seller's fiscal year.
  2  3    Sec. 4.  Section 523A.601, subsection 6, paragraph a, Code
  2  4 2009, is amended to read as follows:
  2  5    a.  A purchase agreement that is funded by a trust shall
  2  6 include a conspicuous statement in language substantially
  2  7 similar to the following language:
  2  8    "For your prearranged funeral agreement, we will deposit
  2  9 not less than eighty percent all of your payments in trust at
  2 10 (name of financial institution), (street address), (city),
  2 11 (state) (zip code) within fifteen days following receipt of
  2 12 the funds.  For your protection, you will be notified within
  2 13 sixty days from the date of deposit from by the financial
  2 14 institution, if acting as a trustee of trust funds under this
  2 15 chapter, to confirm that the deposit of these funds has been
  2 16 made establishing a trust fund as required by law.  If you do
  2 17 not receive this notification, you may contact the Iowa
  2 18 insurance division for assistance by calling the insurance
  2 19 division at (telephone number) or by mail at (street address),
  2 20 (city), Iowa (zip code), or you may contact the financial
  2 21 institution by calling the financial institution at (telephone
  2 22 number) or by mail at the address indicated above."
  2 23                           EXPLANATION
  2 24    This bill requires that all payments made pursuant to a
  2 25 purchase agreement for cemetery merchandise, funeral
  2 26 merchandise, funeral services, or a combination thereof, where
  2 27 performance or delivery under the agreement may be more than
  2 28 120 days following initial payment on the account, must be
  2 29 placed in trust or secured by a surety bond in that amount.
  2 30 Currently, only 80 percent of the amount of such payments is
  2 31 required to be placed in trust or secured by a surety bond.
  2 32 LSB 1577YH 83
  2 33 av/nh/8.1