House File 13 - Introduced HOUSE FILE 13 BY PETTENGILL A BILL FOR An Act requiring all payments for prepaid cemetery and funeral 1 merchandise, and funeral services to be placed in trust or 2 secured by a surety bond. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1261YH (6) 84 av/nh

H.F. 13 Section 1. Section 523A.201, subsections 2 and 3, Code 2011, 1 are amended to read as follows: 2 2. If a seller agrees to furnish cemetery merchandise, 3 funeral merchandise, funeral services, or a combination thereof 4 and performance or delivery may be more than one hundred twenty 5 days following the initial payment on the account, a minimum 6 of eighty percent of all payments made under the purchase 7 agreement shall be placed and remain in trust until the person 8 for whose benefit the funds were paid dies. 9 3. If a purchase agreement for cemetery merchandise, 10 funeral merchandise, funeral services, or a combination 11 thereof provides that payments are to be made in installments, 12 the seller shall deposit eighty percent of each payment all 13 payments made under the purchase agreement in the trust fund 14 until the full amount required to be placed in trust has been 15 deposited. If the purchase agreement is financed with or sold 16 to a financial institution, the purchase agreement shall be 17 considered paid in full and the trust requirements shall be 18 satisfied within fifteen days after the seller receives funds 19 from the financial institution. 20 Sec. 2. Section 523A.201, subsection 5, Code 2011, is 21 amended by striking the subsection. 22 Sec. 3. Section 523A.405, subsection 8, Code 2011, is 23 amended to read as follows: 24 8. The amount of the surety bond shall equal eighty percent 25 the amount of the payments received pursuant to purchase 26 agreements, or the applicable portion thereof, for cemetery 27 merchandise, funeral merchandise, funeral services, or a 28 combination thereof, and the amount needed to adjust the amount 29 of the surety bond for inflation as set by the commissioner 30 based on the consumer price index. The seller shall review 31 the amount of the surety bond no less than annually and shall 32 increase the bond as necessary to reflect additional payments. 33 The amount needed to adjust for inflation shall be added 34 annually to the surety bond during the first quarter of the 35 -1- LSB 1261YH (6) 84 av/nh 1/ 2

H.F. 13 seller’s fiscal year. 1 Sec. 4. Section 523A.601, subsection 6, paragraph a, Code 2 2011, is amended to read as follows: 3 a. A purchase agreement that is funded by a trust shall 4 include a conspicuous statement in language substantially 5 similar to the following language: 6 For your prearranged funeral agreement, we will deposit not 7 less than eighty percent all of your payments in trust at (name 8 of financial institution), (street address), (city), (state) 9 (zip code) within fifteen days following receipt of the funds. 10 For your protection, you will be notified within sixty days 11 from the date of deposit from by the financial institution, 12 if acting as a trustee of trust funds under this chapter , 13 to confirm that the deposit of these funds has been made 14 establishing a trust fund as required by law. If you do not 15 receive this notification, you may contact the Iowa insurance 16 division for assistance by calling the insurance division at 17 (telephone number) or by mail at (street address), (city), Iowa 18 (zip code), or you may contact the financial institution by 19 calling the financial institution at (telephone number) or by 20 mail at the address indicated above. 21 EXPLANATION 22 This bill requires that all payments made pursuant to 23 a purchase agreement for cemetery merchandise, funeral 24 merchandise, funeral services, or a combination thereof, where 25 performance or delivery under the agreement may be more than 26 120 days following initial payment on the account, must be 27 placed in trust or secured by a surety bond in that amount. 28 Currently, only 80 percent of the amount of such payments is 29 required to be placed in trust or secured by a surety bond. 30 -2- LSB 1261YH (6) 84 av/nh 2/ 2