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Public Act 91-0007
HB2081 Enrolled LRB9103838DJcd
AN ACT concerning funeral and cemetery services, amending
named Acts.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 2. The Illinois Funeral or Burial Funds Act is
amended by changing Sections 1 and 4a and adding Section 4b
as follows:
(225 ILCS 45/1) (from Ch. 111 1/2, par. 73.101)
Sec. 1. Payment under pre-need contract. Except as
otherwise provided in this Section, all sales proceeds paid
to any person, partnership, association or corporation with
respect to merchandise or services covered by this Act, upon
any agreement or contract, or any series or combination of
agreements or contracts, which has for a purpose the
furnishing or performance of funeral services, or the
furnishing or delivery of any personal property, merchandise,
or services of any nature in connection with the final
disposition of a dead human body, including, but not limited
to, outer burial containers, urns, combination casket-vault
units, caskets and clothing, for future use at a time
determinable by the death of the person or persons whose body
or bodies are to be so disposed of, shall be held to be trust
funds, and shall be placed in trust in accordance with
Sections 1b and 2, or shall be used to purchase life
insurance or annuities in accordance with Section 2a. The
person, partnership, association or corporation receiving
said payments under a pre-need contract is hereby declared to
be a trustee thereof until deposits of funds are made in
accordance with Section 1b or 2a of this Act. Persons
holding less than $500,000 in trust funds may continue to act
as the trustee after the funds are deposited in accordance
with subsection (d) of Section 1b.
Nothing in this Act shall be construed to prohibit the
inclusion of outer burial containers in sales contracts under
the Illinois Pre-Need Cemetery Sales Act.
(Source: P.A. 88-477.)
(225 ILCS 45/4a)
Sec. 4a. Investment of funds.
(a) A trustee shall, with respect to the investment of
trust funds, exercise the judgment and care under the
circumstances then prevailing that persons of prudence,
discretion, and intelligence exercise in the management of
their own affairs, not in regard to speculation, but in
regard to the permanent disposition of their funds,
considering the probable income as well as the probable
safety of their capital.
(b) The trust shall be a single-purpose trust fund. In
the event of the seller's bankruptcy, insolvency or
assignment for the benefit of creditors, or an adverse
judgment, the trust funds shall not be available to any
creditor as assets of the seller or to pay any expenses of
any bankruptcy or similar proceeding, but shall be
distributed to the purchasers or managed for their benefit by
the trustee holding the funds. Except in an action by the
Comptroller to revoke a license issued pursuant to this Act
and for creation of a receivership as provided in this Act,
the trust shall not be subject to judgment, execution,
garnishment, attachment, or other seizure by process in
bankruptcy or otherwise, nor to sale, pledge, mortgage, or
other alienation, and shall not be assignable except as
approved by the Comptroller. The changes made by this
amendatory Act of the 91st General Assembly are intended to
clarify existing law regarding the inability of licensees to
pledge the trust.
(c) Because it is not known at the time of deposit or at
the time that income is earned on the trust account to whom
the principal and the accumulated earnings will be
distributed for the purpose of determining the Illinois
income tax due on these trust funds, the principal and any
accrued earnings or losses related to each individual account
shall be held in suspense until the final determination is
made as to whom the account shall be paid. The beneficiary's
estate shall not be responsible for any funeral and burial
purchases listed in a pre-need contract if the pre-need
contract is entered into on a guaranteed price basis.
If a pre-need contract is not a guaranteed price
contract, then to the extent the proceeds of a non-guaranteed
price pre-need contract cover the funeral and burial expenses
for the beneficiary, no claim may be made against the estate
of the beneficiary. A claim may be made against the
beneficiary's estate if the charges for the funeral services
and merchandise at the time of use exceed the amount of the
amount in trust plus the percentage of the sale proceeds
initially retained by the seller or the face value of the
life insurance policy or tax-deferred annuity.
(d) Trust funds shall not be invested by the trustee in
life insurance policies or tax-deferred annuities unless the
following requirements are met:
(1) The company issuing the life insurance policies
or tax-deferred annuities is licensed by the Illinois
Department of Insurance and the insurance producer or
annuity seller is licensed to do business in the State of
Illinois;
(2) Prior to the investment, the purchaser
approves, in writing, the investment in life insurance
policies or tax-deferred annuities;
(3) Prior to the investment, the purchaser is
notified by the seller in writing about the disclosures
required for all pre-need contracts under Section 1a-1 of
this Act, and the purchase of life insurance or a
tax-deferred annuity is subject to the requirements of
Section 2a of this Act;
(4) Prior to the investment, the trustee informs
the Comptroller that trust funds shall be removed from
the trust account to purchase life insurance or a
tax-deferred annuity upon the written consent of the
purchaser;
(5) The purchaser retains the right to refund
provided for in this Act, unless the pre-need contract is
sold on an irrevocable basis as provided in Section 4 of
this Act; and
(6) Notice must be given in writing that the cash
surrender value of a life insurance policy may be less
than the amount provided for by the refund provisions of
the trust account.
(Source: P.A. 88-477.)
(225 ILCS 45/4b new)
Sec. 4b. Licensee bankruptcy. In the event of a
licensee's bankruptcy, insolvency, or assignment for the
benefit of creditors, or in the event of the bankruptcy,
insolvency, or assignment for the benefit of creditors of any
person, partnership, association, corporation, or other
entity that possesses a controlling interest in a licensee,
the licensee shall provide notice in writing of that event to
each purchaser of a pre-need sales contract or a pre-need
contract within 30 days after the event of bankruptcy,
insolvency, or assignment for the benefit of creditors. At a
minimum, the notice must contain the following:
(1) The name and address of the licensee.
(2) If different from the licensee, the name and
address of the party that is the subject of the
bankruptcy, insolvency, or assignment for the benefit of
creditors.
(3) A brief description of the event of bankruptcy,
insolvency, or assignment for the benefit of creditors.
(4) The case name or other identifying title of any
matter pending in any court, federal or State, pertaining
to the bankruptcy, insolvency, or assignment for the
benefit of creditors.
(5) The name and address of the court in which the
bankruptcy, insolvency, or assignment for the benefit of
creditors is pending.
(6) A description of any action the purchaser must
undertake to file a claim or to protect the purchaser's
interests, including the purchaser's right to a refund
under this Act.
Section 5. The Cemetery Care Act is amended by changing
Sections 4 and 15 as follows:
(760 ILCS 100/4) (from Ch. 21, par. 64.4)
Sec. 4. Care funds; deposits; investments. Whenever a
cemetery authority owning, operating, controlling or managing
a privately operated cemetery accepts care funds, either in
connection with the sale or giving away at an imputed value
of an interment right, entombment right or inurnment right,
or in pursuance of a contract, or whenever, as a condition
precedent to the purchase or acceptance of an interment
right, entombment right or inurnment right, such cemetery
authority requires the establishment of a care fund or a
deposit in an already existing care fund, then such cemetery
authority shall execute and deliver to the person from whom
received an instrument in writing which shall specifically
state: (a) the nature and extent of the care to be furnished,
and (b) that such care shall be furnished only in so far as
the net income derived from the amount deposited in trust
will permit (the income from the amount so deposited, less
necessary expenditures of administering the trust, shall be
deemed the net income), and (c) that not less than the
following amounts will be set aside and deposited in trust:
1. For interment rights, $1 per square foot of the
space sold or 15% of the sales price or imputed value,
whichever is the greater, with a minimum of $25 for each
individual interment right.
2. For entombment rights, not less than 10% of the
sales price or imputed value with a minimum of $25 for
each individual entombment right.
3. For inurnment rights, not less than 10% of the
sales price or imputed value with a minimum of $15 for
each individual inurnment right.
4. For any transfer of interment rights, entombment
rights, or inurnment rights recorded in the records of
the cemetery authority, excepting only transfers between
members of the immediate family of the transferor, a
minimum of $25 for each such right transferred. For the
purposes of this paragraph "immediate family of the
transferor" means the spouse, parents, grandparents,
children, grandchildren, and siblings of the transferor.
5. Upon an interment, entombment, or inurnment in a
grave, crypt, or niche in which rights of interment,
entombment, or inurnment were originally acquired from a
cemetery authority prior to January 1, 1948, a minimum of
$25 for each such right exercised.
6. For the special care of any lot, grave, crypt,
or niche or of a family mausoleum, memorial, marker, or
monument, the full amount received.
Such setting aside and deposit shall be made by such
cemetery authority not later than 30 days after the close of
the month in which the cemetery authority gave away for an
imputed value or received the final payment on the purchase
price of interment rights, entombment rights, or inurnment
rights, or received the final payment for the general or
special care of a lot, grave, crypt or niche or of a family
mausoleum, memorial, marker or monument; and such amounts
shall be held by the trustee of the care funds of such
cemetery authority in trust in perpetuity for the specific
purposes stated in said written instrument. For all care
funds received by a cemetery authority, except for care funds
received by a cemetery authority pursuant to a specific gift,
grant, contribution, payment, legacy, or contract that are
subject to investment restrictions more restrictive than the
investment provisions set forth in this Act, and except for
care funds otherwise subject to a trust agreement executed by
a person or persons responsible for transferring the specific
gift, grant, contribution, payment, or legacy to the cemetery
authority that contains investment restrictions more
restrictive than the investment provisions set forth in this
Act, the cemetery authority may, without the necessity of
having to obtain prior approval from any court in this State,
designate a new trustee in accordance with this Act and
invest the care funds in accordance with this Section,
notwithstanding any contrary limitation contained in the
trust agreement.
Any such cemetery authority engaged in selling or giving
away at an imputed value interment rights, entombment rights
or inurnment rights, in conjunction with the selling or
giving away at an imputed value any other merchandise or
services not covered by this Act, shall be prohibited from
increasing the sales price or imputed value of those items
not requiring a care fund deposit under this Act with the
purpose of allocating a lesser sales price or imputed value
to items that require a care fund deposit.
In the event any sale that would require a deposit to
such cemetery authority's care fund is made by a cemetery
authority on an installment basis, and the installment
contract is factored, discounted, or sold to a third party,
the cemetery authority shall deposit the amount due to the
care fund within 30 days after the close of the month in
which the installment contract was factored, discounted, or
sold. If, subsequent to such deposit, the purchaser defaults
on the contract such that no care fund deposit on that
contract would have been required, the cemetery authority may
apply the amount deposited as a credit against future
required deposits.
The trust authorized by this Section shall be a single
purpose trust fund. In the event of the seller's bankruptcy,
insolvency, or assignment for the benefit of creditors, or an
adverse judgment, the trust funds shall not be available to
any creditor as assets of the cemetery authority or to pay
any expenses of any bankruptcy or similar proceeding, but
shall be retained intact to provide for the future
maintenance of the cemetery. Except in an action by the
Comptroller to revoke a license issued pursuant to this Act
and for creation of a receivership as provided in this Act,
the trust shall not be subject to judgment, execution,
garnishment, attachment, or other seizure by process in
bankruptcy or otherwise, nor to sale, pledge, mortgage, or
other alienation, and shall not be assignable except as
approved by the Comptroller. The changes made by this
amendatory Act of the 91st General Assembly are intended to
clarify existing law regarding the inability of licensees to
pledge the trust.
(Source: P.A. 88-477; 89-615, eff. 8-9-96.)
(760 ILCS 100/15) (from Ch. 21, par. 64.15)
Sec. 15. The Comptroller may, upon 10 days' notice to
the licensee, by United States mail directed to the licensee
at the address set forth in the license, stating the
contemplated action and, in general, the grounds therefor,
and upon reasonable opportunity to be heard prior to such
action, revoke any license issued hereunder if he finds that:
(a) The licensee has failed to make the annual report or
to maintain in effect the required bond or to comply with an
order, decision, or finding of the Comptroller made pursuant
to this Act; or that
(b) The licensee has violated any provision of this Act
or any regulation or direction made by the Comptroller under
this Act; or that
(c) Any fact or condition exists which would constitute
grounds for denying an application for a new license, if it
had existed at the time of the original application for such
license, would have warranted the Comptroller in refusing the
issuance of the license.
(Source: P.A. 78-592.)
Section 10. The Illinois Pre-Need Cemetery Sales Act is
amended by changing Sections 4, 14, 15, 16, and 20 and adding
16.5 as follows:
(815 ILCS 390/4) (from Ch. 21, par. 204)
Sec. 4. Definitions. As used in this Act, the following
terms shall have the meaning specified:
(a) "Pre-need sales contract" or "Pre-need sales" means
any agreement or contract or series or combination of
agreements or contracts which have for a purpose the sale of
cemetery merchandise, cemetery services or undeveloped
interment, entombment or inurnment spaces where the terms of
such sale require payment or payments to be made at a
currently determinable time and where the merchandise,
services or completed spaces are to be provided more than 120
days following the initial payment on the account.
(b) "Delivery" occurs when:
(1) physical possession of the merchandise is
transferred or the easement for burial rights in a
completed space is executed, delivered and transferred to
the buyer; or
(2) title to the merchandise has been transferred
to the buyer and the merchandise has been paid for and is
in the possession of the seller who has placed it, until
needed, at the site of its ultimate use; or
(3) (A) A. the merchandise has been permanently
identified with the name of the buyer or the beneficiary
and delivered to a licensed and bonded warehouse and both
title to the merchandise and a warehouse receipt have
been delivered to the purchaser or beneficiary; except
that in the case of outer burial containers, the use of a
licensed and bonded warehouse as set forth in this
paragraph shall not constitute delivery for purposes of
this Act. Nothing herein shall prevent a seller from
perfecting a security interest in accordance with the
Uniform Commercial Code on any merchandise covered under
this Act.
(B) B. All warehouse facilities to which sellers
deliver merchandise pursuant to this Act shall:
(i) be either located in the State of Illinois
or qualify as a foreign warehouse facility as
defined herein;
(ii) submit to the Comptroller not less than
annually, by March 1 of each year, a report of all
cemetery merchandise stored by each licensee under
this Act which is in storage on the date of the
report;
(iii) permit the Comptroller or his designee
at any time to examine stored merchandise and to
examine any documents pertaining thereto;
(iv) submit evidence satisfactory to the
Comptroller that all merchandise stored by said
warehouse for licensees under this Act is insured
for casualty or other loss normally assumed by a
bailee for hire;
(v) demonstrate to the Comptroller that the
warehouse has procured and is maintaining a
performance bond in the form, content and amount
sufficient to unconditionally guarantee to the
purchaser or beneficiary the prompt shipment of the
cemetery merchandise.
(C) C. "Cemetery merchandise" means items of
personal property normally sold by a cemetery authority
not covered under the Illinois Funeral or Burial Funds
Act "An Act concerning agreements for furnishing or
delivery of personal property, merchandise or services in
connection with the final disposition of dead human
bodies and regulating use or disposition of funds paid on
said agreements and providing penalties for violation
thereof", approved July 14, 1955, as amended, including
but not limited to:
(1) memorials,
(2) markers,
(3) monuments, and
(4) foundations, and.
(5) outer burial containers.
(D) D. "Undeveloped interment, entombment or
inurnment interment spaces" or "undeveloped spaces" means
any space to be used for the reception of human remains
that is not completely and totally constructed at the
time of initial payment therefor therefore in a:
(1) lawn crypt,
(2) mausoleum,
(3) garden crypt,
(4) columbarium, or
(5) cemetery section.
(E) E. "Cemetery services" means those services
customarily performed by a cemetery or crematory
personnel in connection with the interment, entombment,
inurnment or cremation of a dead human body.
(F) F. "Cemetery section" means a grouping of
spaces intended to be developed simultaneously for the
purpose of interring human remains.
(G) G. "Columbarium" means an arrangement of niches
that may be an entire building, a complete room, a series
of special indoor alcoves, a bank along a corridor or
part of an outdoor garden setting that is constructed of
permanent material such as bronze, marble, brick, stone
or concrete for the inurnment of human remains.
(H) H. "Lawn crypt" means a permanent underground
crypt usually constructed of reinforced concrete or
similar material installed in multiple units for the
interment of human remains.
(I) I. "Mausoleum" or "garden crypt" means a
grouping of spaces constructed of reinforced concrete or
similar material constructed or assembled above the
ground for entombing human remains.
(J) J. "Memorials, markers and monuments" means the
object usually comprised of a permanent material such as
granite or bronze used to identify and memorialize the
deceased.
(K) K. "Foundations" means those items used to
affix or support a memorial or monument to the ground in
connection with the installation of a memorial, marker or
monument.
(L) L. "Person" means an individual, corporation,
partnership, joint venture, business trust, voluntary
organization or any other form of entity.
(M) M. "Seller" means any person selling or
offering for sale cemetery merchandise, cemetery services
or undeveloped spaces on a pre-need basis.
(N) N. "Religious cemetery" means mean a cemetery
owned, operated, controlled or managed by any recognized
church, religious society, association or denomination or
by any cemetery authority or any corporation
administering, or through which is administered, the
temporalities of any recognized church, religious
society, association or denomination.
(O) O. "Municipal cemetery" means a cemetery owned,
operated, controlled or managed by any city, village,
incorporated town, township, county or other municipal
corporation, political subdivision, or instrumentality
thereof authorized by law to own, operate or manage a
cemetery.
(O-1) "Outer burial container" means a container
made of concrete, steel, wood, fiberglass, or similar
material, used solely at the interment site, and designed
and used exclusively to surround or enclose a separate
casket and to support the earth above such casket,
commonly known as a burial vault, grave box, or grave
liner, but not including a lawn crypt.
(P) P. "Sales price" means the gross amount paid by
a purchaser on a pre-need sales contract for cemetery
merchandise, cemetery services or undeveloped interment,
entombment or inurnment spaces, excluding sales taxes,
credit life insurance premiums, finance charges and
"Cemetery Care Act" contributions.
(Q) Q. "Foreign warehouse facility" means a
warehouse facility now or hereafter located in any state
or territory of the United States, including the District
of Columbia, other than the State of Illinois.
A foreign warehouse facility shall be deemed to have
appointed the Comptroller to be its true and lawful
attorney upon whom may be served all legal process in any
action or proceeding against it relating to or growing
out of this Act, and the acceptance of the delivery of
stored merchandise under this Act shall be signification
of its agreement that any such process against it which
is so served, shall be of the same legal force and
validity as though served upon it personally.
Service of such process shall be made by delivering
to and leaving with the Comptroller, or any agent having
charge of the Comptroller's Department of Cemetery and
Burial Trusts, a copy of such process and such service
shall be sufficient service upon such foreign warehouse
facility if notice of such service and a copy of the
process are, within 10 days thereafter, sent by
registered mail by the plaintiff to the foreign warehouse
facility at its principal office and the plaintiff's
affidavit of compliance herewith is appended to the
summons. The Comptroller shall keep a record of all
process served upon him under this Section and shall
record therein the time of such service.
(Source: P.A. 85-1209; revised 10-31-98.)
(815 ILCS 390/14) (from Ch. 21, par. 214)
Sec. 14. Contract required.
(a) It is unlawful for any seller doing business within
this State to accept sales proceeds, either directly or
indirectly by any means, unless the seller enters into a
pre-need sales contract with the purchaser which meets the
following requirements:
(1) A written sales contract shall be executed in
duplicate for each pre-need sale made by a licensee, and
a signed copy given to the purchaser. Each completed
contract shall be numbered and shall contain the name and
address of the purchaser and the seller, the name of the
person, if known, who is to receive the cemetery
merchandise, cemetery services or the completed
interment, entombment or inurnment spaces under the
contract and specifically identify such merchandise,
services or spaces.
(2) In addition, such contracts must contain a
provision in distinguishing typeface substantially as
follows follow:
"Notwithstanding anything in this contract to the
contrary, you are afforded certain specific rights of
cancellation and refund under Sections 18 and 19 of the
Illinois Pre-Need Cemetery Sales Act, enacted by the 84th
General Assembly of the State of Illinois".
(3) All pre-need sales contracts shall be sold on a
guaranteed price basis. At the time of performance of the
service or delivery of the merchandise, the seller shall
be prohibited from assessing the purchaser or his heirs
or assigns or duly authorized representative any
additional charges for the specific merchandise and
services listed on the pre-need sales contract.
Each contract shall clearly disclose that the price of
the merchandise or services is guaranteed and shall contain
the following statement in 12 point bold type:
"THIS CONTRACT GUARANTEES THE BENEFICIARY THE SPECIFIC
GOODS AND SERVICES CONTRACTED FOR. NO ADDITIONAL CHARGES
MAY BE REQUIRED. FOR DESIGNATED GOODS AND SERVICES,
ADDITIONAL CHARGES MAY BE INCURRED FOR UNEXPECTED EXPENSES."
(b) Every pre-need sales contract must be in writing,
and no pre-need sales contract form may be used unless it has
previously been filed with the Comptroller. The Comptroller
shall review all pre-need sales contract forms and, upon
written notification to the seller, shall prohibit the use of
contract forms that do not meet the requirements of this Act.
Any use or attempted use of any oral pre-need sales contract
or any written pre-need sales contract in a form not filed
with the Comptroller or in a form that does not meet the
requirements of this Act shall be deemed a violation of this
Act. The Comptroller may by rule develop a model pre-need
sales contract form that meets the requirements of this Act.
(c) To the extent the Rule is applicable, every pre-need
sales contract is subject to the Federal Trade Commission
Rule concerning the Cooling-Off Period for Door-to-Door Sales
(16 CFR Part 429).
(Source: P.A. 85-805.)
(815 ILCS 390/15) (from Ch. 21, par. 215)
Sec. 15. (a) Whenever a seller receives anything of
value under a pre-need sales contract, the person receiving
such value shall deposit 50% of all proceeds received into
one or more trust funds maintained pursuant to this Section,
except that, in the case of proceeds received for the
purchase of outer burial containers, 85% of the proceeds
shall be deposited into one or more trust funds. Such
deposits shall be made until the amount deposited in trust
equals 50% of the sales price of the cemetery merchandise,
cemetery services and undeveloped spaces included in such
contract, except that, in the case of deposits for outer
burial containers, deposits shall be made until the amount
deposited in trust equals 85% of the sales price. In the
event an installment contract is factored, discounted or sold
to a third party, the seller shall deposit an amount equal to
50% of the sales price of the installment contract, except
that, for the portion of the contract attributable to the
sale of outer burial containers, the seller shall deposit an
amount equal to 85% of the sales price. Proceeds required to
be deposited in trust which are attributable to cemetery
merchandise and cemetery services shall be held in a
"Cemetery Merchandise Trust Fund". Proceeds required to be
deposited in trust which are attributable to the sale of
undeveloped interment, entombment or inurnment spaces shall
be held in a "Pre-construction Trust Fund". If merchandise is
delivered for storage in a bonded warehouse, as authorized
herein, and payment of transportation or other charges
totaling more than $20 will be required in order to secure
delivery to the site of ultimate use, upon such delivery to
the warehouse the seller shall deposit to the trust fund the
full amount of the actual or estimated transportation charge.
Transportation charges which have been prepaid by the seller
shall not be deposited to trust funds maintained pursuant to
this Section. As used in this Section, "all proceeds" means
the entire amount paid by a purchaser in connection with a
pre-need sales contract, including finance charges and
Cemetery Care Act contributions, but excluding sales taxes
and credit life insurance premiums.
(b) All trust deposits required by this Act shall be
made within 30 days following the end of the month of
receipt.
(c) A trust established under this Act must be
maintained:
(1) in a trust account established in a bank, savings
and loan association or credit union authorized to do
business in Illinois where such accounts are insured by an
agency of the federal government;
(2) in a trust company authorized to do business in
Illinois; or
(3) in an investment company authorized to do business
in Illinois insured by the Securities Brokers Insurance
Corporation.
(d) Funds deposited in the trust account shall be
identified in the records of the seller by the name of the
purchaser. Nothing shall prevent the trustee from commingling
the deposits in any such trust fund for purposes of the
management thereof and the investment of funds therein as
provided in the "Common Trust Fund Act", approved June 24,
1949, as amended. In addition, multiple trust funds
maintained pursuant to this Act may be commingled or
commingled with other funeral or burial related trust funds,
provided that all record keeping requirements imposed by or
pursuant to law are met.
(e) In lieu of a pre-construction trust fund, a seller
of undeveloped interment, entombment or inurnment spaces may
obtain and file with the Comptroller a performance bond in an
amount at least equal to 50% of the sales price of the
undeveloped spaces or the estimated cost of completing
construction, whichever is greater. The bond shall be
conditioned on the satisfactory construction and completion
of the undeveloped spaces as required in Section 19 of this
Act.
Each bond obtained under this Section shall have as
surety thereon a corporate surety company incorporated under
the laws of the United States, or a State, the District of
Columbia or a territory or possession of the United States.
Each such corporate surety company must be authorized to
provide performance bonds as required by this Section, have
paid-up capital of at least $250,000 in cash or its
equivalent and be able to carry out its contracts. Each
pre-need seller must provide to the Comptroller, for each
corporate surety company such seller utilizes, a statement of
assets and liabilities of the corporate surety company sworn
to by the president and secretary of the corporation by
January 1 of each year.
The Comptroller shall prohibit pre-need sellers from
doing new business with a corporate surety company if the
company is insolvent or is in violation of this Section. In
addition the Comptroller may direct a pre-need seller to
reinstate a pre-construction trust fund upon the
Comptroller's determination that the corporate surety company
no longer is sufficient security.
All performance bonds issued pursuant to this Section
must be irrevocable during the statutory term for completing
construction specified in Section 19 of this Act, unless
terminated sooner by the completion of construction.
(f) Whenever any pre-need contract shall be entered into
and include 1) items of cemetery merchandise and cemetery
services, and 2) rights to interment, inurnment or entombment
in completed spaces without allocation of the gross sale
price among the items sold, the application of payments
received under the contract shall be allocated, first to the
right to interment, inurnment or entombment, second to items
of cemetery merchandise and cemetery services, unless some
other allocation is clearly provided in the contract.
(g) Any person engaging in pre-need sales who enters
into a combination sale which involves the sale of items
covered by a trust or performance bond requirement and any
item not covered by any entrustment or bond requirement,
shall be prohibited from increasing the gross sales price of
those items not requiring entrustment with the purpose of
allocating a lesser gross sales price to items which require
a trust deposit or a performance bond.
(Source: P.A. 85-1209.)
(815 ILCS 390/16) (from Ch. 21, par. 216)
Sec. 16. Trust funds; disbursements.
(a) A trustee shall make no disbursements from the trust
fund except as provided in this Act.
(b) A trustee shall, with respect to the investment of
such trust funds, exercise the judgment and care under the
circumstances then prevailing which persons of prudence,
discretion and intelligence exercise in the management of
their own affairs, not in regard to speculation, but in
regard to the permanent disposition of their funds,
considering the probable income as well as the probable
safety of their capital.
The seller shall act as trustee of all amounts received
for cemetery merchandise, services, or undeveloped spaces
until those amounts have been deposited into the trust fund.
The seller may continue to be the trustee of up to $500,000
that has been deposited into the trust fund, but the seller
must retain an independent trustee for any amount of trust
funds in excess of $500,000. A seller holding trust funds in
excess of $500,000 on the effective date of this amendatory
Act of 1996 shall have 36 months to retain an independent
trustee for the amounts over $500,000; any other seller must
retain an independent trustee for its trust funds in excess
of $500,000 as soon as may be practical. The Comptroller
shall have the right to disqualify the trustee upon the same
grounds as for refusing to grant or revoking a license
hereunder. Upon notice to the Comptroller, the seller may
change the trustee of the trust fund.
(c) The trustee may rely upon certifications and
affidavits made to it under the provisions of this Act, and
shall not be liable to any person for such reliance.
(d) A trustee shall be allowed to withdraw from the
trust funds maintained pursuant to this Act, payable solely
from the income earned on such trust funds, a reasonable fee
for all usual and customary services for the operation of the
trust fund, including, but not limited to trustee fees,
investment advisor fees, allocation fees, annual audit fees
and other similar fees. The maximum amount allowed to be
withdrawn for these fees each year shall be the lesser of 3%
of the balance of the trust calculated on an annual basis or
the amount of annual income generated therefrom.
(e) The trust shall be a single-purpose trust fund. In
the event of the seller's bankruptcy, insolvency or
assignment for the benefit of creditors, or an adverse
judgment, the trust funds shall not be available to any
creditor as assets of the seller or to pay any expenses of
any bankruptcy or similar proceeding, but shall be
distributed to the purchasers or managed for their benefit by
the trustee holding the funds. Except in an action by the
Comptroller to revoke a license issued pursuant to this Act
and for creation of a receivership as provided in this Act,
the trust shall not be subject to judgment, execution,
garnishment, attachment, or other seizure by process in
bankruptcy or otherwise, nor to sale, pledge, mortgage, or
other alienation, and shall not be assignable except as
approved by the Comptroller. The changes made by this
amendatory Act of the 91st General Assembly are intended to
clarify existing law regarding the inability of licensees to
pledge the trust.
(f) Because it is not known at the time of deposit or at
the time that income is earned on the trust account to whom
the principal and the accumulated earnings will be
distributed, for purposes of determining the Illinois Income
Tax due on these trust funds, the principal and any accrued
earnings or losses relating to each individual account shall
be held in suspense until the final determination is made as
to whom the account shall be paid.
(Source: P.A. 88-477; 89-615, eff. 8-9-96.)
(815 ILCS 390/16.5 new)
Sec. 16.5. Licensee bankruptcy. In the event of a
licensee's bankruptcy, insolvency, or assignment for the
benefit of creditors, or in the event of the bankruptcy,
insolvency, or assignment for the benefit of creditors of any
person, partnership, association, corporation, or other
entity that possesses a controlling interest in a licensee,
the licensee shall provide notice in writing of that event to
each purchaser of a pre-need sales contract or a pre-need
contract within 30 days after the event of bankruptcy,
insolvency, or assignment for the benefit of creditors. At a
minimum, the notice must contain the following:
(1) The name and address of the licensee.
(2) If different from the licensee, the name and
address of the party that is the subject of the
bankruptcy, insolvency, or assignment for the benefit of
creditors.
(3) A brief description of the event of bankruptcy,
insolvency, or assignment for the benefit of creditors.
(4) The case name or other identifying title of any
matter pending in any court, federal or State, pertaining
to the bankruptcy, insolvency, or assignment for the
benefit of creditors.
(5) The name and address of the court in which the
bankruptcy, insolvency, or assignment for the benefit of
creditors is pending.
(6) A description of any action the purchaser must
undertake to file a claim or to protect the purchaser's
interests, including the purchaser's right to a refund
under this Act.
(815 ILCS 390/20) (from Ch. 21, par. 220)
Sec. 20. (a) Each licensee must keep accurate accounts,
books and records in this State of all transactions, copies
of agreements, dates and amounts of payments made or
received, the names and addresses of the contracting parties,
the names and addresses of persons for whose benefit funds
are received, if known, and the names of the trust
depositories.
(b) Each licensee must maintain such records for a
period of 3 years after the licensee shall have fulfilled his
obligation under the pre-need contract or 3 years after any
stored merchandise shall have been provided to the purchaser
or beneficiary, whichever is later.
(c) Each licensee shall submit reports to the
Comptroller annually, under oath, on forms furnished by the
Comptroller. The annual report shall contain, but shall not
be limited to, the following:
(1) An accounting of the principal deposit and
additions of principal during the fiscal year.
(2) An accounting of any withdrawal of principal or
earnings.
(3) An accounting at the end of each fiscal year,
of the total amount of principal and earnings held.
(d) The annual report shall be filed by the licensee
with the Comptroller within 75 days after the end of the
licensee's fiscal year. An extension of up to 60 days may be
granted by the Comptroller, upon a showing of need by the
licensee. Any other reports shall be in the form furnished
or specified by the Comptroller. If a licensee fails to
submit an annual report to the Comptroller within the time
specified in this Section, the Comptroller shall impose upon
the licensee a penalty of $5 for each and every day the
licensee remains delinquent in submitting the annual report.
Each report shall be accompanied by a check or money order in
the amount of $10 payable to: Comptroller, State of
Illinois.
(e) On and after the effective date of this amendatory
Act of the 91st General Assembly, a licensee may report all
required information concerning the sale of outer burial
containers on the licensee's annual report required to be
filed under this Act and shall not be required to report that
information under the Illinois Funeral or Burial Funds Act,
as long as the information is reported under this Act.
(Source: P.A. 88-477.)
Section 99. Effective date. This Act takes effect upon
becoming law, except that the changes to Section 1 of the
Funeral or Burial Funds Act and the changes to Sections 4,
14, 15, and 20 of the Pre-Need Cemetery Sales Act take effect
on January 1, 2000.
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