HOUSE FILE 13

BY  PETTENGILL

A BILL FOR

An Act requiring all payments for prepaid cemetery and funeral merchandise, and funeral services to be placed in trust or secured by a surety bond.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  Section 523A.201, subsections 2 and 3, Code 2011, are amended to read as follows:
   2.  If a seller agrees to furnish cemetery merchandise, funeral merchandise, funeral services, or a combination thereof and performance or delivery may be more than one hundred twenty days following the initial payment on the account,a minimum of eighty percent of all payments made under the purchase agreement shall be placed and remain in trust until the person for whose benefit the funds were paid dies.
   3.  If a purchase agreement for cemetery merchandise, funeral merchandise, funeral services, or a combination thereof provides that payments are to be made in installments, the seller shall deposit eighty percent of each payment all payments made under the purchase agreement in the trust fund until the full amount required to be placed in trust has been deposited. If the purchase agreement is financed with or sold to a financial institution, the purchase agreement shall be considered paid in full and the trust requirements shall be satisfied within fifteen days after the seller receives funds from the financial institution.
   Sec. 2.  Section 523A.201, subsection 5, Code 2011, is amended by striking the subsection.
   Sec. 3.  Section 523A.405, subsection 8, Code 2011, is amended to read as follows:
   8.  The amount of the surety bond shall equal eighty percent the amount of the payments received pursuant to purchase agreements, or the applicable portion thereof, for cemetery merchandise, funeral merchandise, funeral services, or a combination thereof, and the amount needed to adjust the amount of the surety bond for inflation as set by the commissioner based on the consumer price index. The seller shall review the amount of the surety bond no less than annually and shall increase the bond as necessary to reflect additional payments. The amount needed to adjust for inflation shall be added annually to the surety bond during the first quarter of the seller’s fiscal year.
   Sec. 4.  Section 523A.601, subsection 6, paragraph a, Code 2011, is amended to read as follows:
   a.  A purchase agreement that is funded by a trust shall include a conspicuous statement in language substantially similar to the following language:
  For your prearranged funeral agreement, we will deposit not less than eighty percent all of your payments in trust at (name of financial institution), (street address), (city), (state) (zip code) within fifteen days following receipt of the funds. For your protection, you will be notified within sixty days from the date of deposit from by the financial institution, if acting as a trustee of trust funds under this chapter, to confirm that the deposit of these funds has been made establishing a trust fund as required by law. If you do not receive this notification, you may contact the Iowa insurance division for assistance by calling the insurance division at (telephone number) or by mail at (street address), (city), Iowa (zip code), or you may contact the financial institution by calling the financial institution at (telephone number) or by mail at the address indicated above.
EXPLANATION
   This bill requires that all payments made pursuant to a purchase agreement for cemetery merchandise, funeral merchandise, funeral services, or a combination thereof, where performance or delivery under the agreement may be more than 120 days following initial payment on the account, must be placed in trust or secured by a surety bond in that amount. Currently, only 80 percent of the amount of such payments is required to be placed in trust or secured by a surety bond.