97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB0229

 

Introduced 01/21/11, by Rep. Dan Brady

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Illinois Funeral or Burial Funds Act. Restores a provision that allows persons holding less than $500,000 in trust funds to continue to act as the trustee after the funds are deposited. Provides that a pre-need contract must, if funded by a trust, clearly identify the trustee's name and address and the primary state or federal regulator of the trustee. Provides that a trustee may be the seller or provider of funeral services or merchandise if the seller holds sales of less than $500,000 in trust and deposits funds for which the seller is acting as trustee according in a certain manner. Provides that if a purchaser selects a trust arrangement to fund the pre-need contract, the trust must be maintained: (1) in a deposit account maintained by the seller as trustee in a bank, savings and loan association, savings bank, or credit union authorized to do business in Illinois in which accounts are insured by an agency of the federal government, (2) in a trust company authorized to do business in Illinois, or (3) with a corporate fiduciary as defined in the Corporate Fiduciary Act. Restores a provision that allows trust funds to be maintained in a financial institution located in a state adjoining Illinois if certain conditions are met. Provides that a trustee has a duty to manage the trust and, with respect to the investment of trust funds, shall exercise certain judgment and care. Provides that the trustee has a duty to manage and invest the assets pursuant to the Prudent Investor Rule under the Trusts and Trustees Act if the amount of funds to be entrusted exceeds $1,000,000. Amends the Illinois Pre-Need Cemetery Sales Act. Removes language that provides that the seller must retain a corporate fiduciary as an independent trustee for any amount of trust funds. Provides that a trust established under the Act must be maintained: (1) in a deposit account maintained by the seller as trustee in a bank, savings and loan association, or credit union authorized to do business in Illinois in which 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. Effective immediately.


LRB097 02678 CEL 42697 b

 

 

A BILL FOR

 

HB0229LRB097 02678 CEL 42697 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Funeral or Burial Funds Act is
5amended by changing Sections 1, 1a-1, 1b, 2, and 4a as follows:
 
6    (225 ILCS 45/1)  (from Ch. 111 1/2, par. 73.101)
7    Sec. 1. Payment under pre-need contract. Except as
8otherwise provided in this Section, all sales proceeds paid to
9any person, partnership, association or corporation with
10respect to merchandise or services covered by this Act, upon
11any agreement or contract, or any series or combination of
12agreements or contracts, which has for a purpose the furnishing
13or performance of funeral services, or the furnishing or
14delivery of any personal property, merchandise, or services of
15any nature in connection with the final disposition of a dead
16human body, including, but not limited to, outer burial
17containers, urns, combination casket-vault units, caskets and
18clothing, for future use at a time determinable by the death of
19the person or persons whose body or bodies are to be so
20disposed of, shall be held to be trust funds, and shall be
21placed in trust in accordance with Sections 1b and 2, or shall
22be used to purchase life insurance or annuities in accordance
23with Section 2a. The person, partnership, association or

 

 

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1corporation receiving said payments under a pre-need contract
2is hereby declared to be a trustee thereof until deposits of
3funds are made in accordance with Section 1b or 2a of this Act.
4Persons holding less than $500,000 in trust funds may continue
5to act as the trustee after the funds are deposited in
6accordance with subsection (d) of Section 1b.
7    Nothing in this Act shall be construed to prohibit the
8inclusion of outer burial containers in sales contracts under
9the Illinois Pre-Need Cemetery Sales Act.
10(Source: P.A. 96-879, eff. 2-2-10.)
 
11    (225 ILCS 45/1a-1)
12    Sec. 1a-1. Pre-need contracts.
13    (a) It shall be unlawful for any seller doing business
14within this State to accept sales proceeds from a purchaser,
15either directly or indirectly by any means, unless the seller
16enters into a pre-need contract with the purchaser which meets
17the following requirements:
18        (1) It states the name and address of the principal
19    office of the seller and the parent company of the seller,
20    if any.
21        (1.5) If funded by a trust, it clearly identifies the
22    trustee's name and address and the primary state or federal
23    regulator of the trustee as a corporate fiduciary.
24        (1.7) If funded by life insurance, it clearly
25    identifies the life insurance provider and the primary

 

 

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1    regulator of the life insurance provider.
2        (2) It clearly identifies the provider's name and
3    address, the purchaser, and the beneficiary, if other than
4    the purchaser.
5        (2.5) If the provider has branch locations, the
6    contract gives the purchaser the opportunity to identify
7    the branch at which the funeral will be provided.
8        (3) It contains a complete description of the funeral
9    merchandise and services to be provided and the price of
10    the merchandise and services, and it clearly discloses
11    whether the price of the merchandise and services is
12    guaranteed or not guaranteed as to price.
13            (A) Each guaranteed price contract shall contain
14        the following statement in 12 point bold type:
15            THIS CONTRACT GUARANTEES THE BENEFICIARY THE
16        SPECIFIC GOODS AND SERVICES CONTRACTED FOR. NO
17        ADDITIONAL CHARGES MAY BE REQUIRED. FOR DESIGNATED
18        GOODS AND SERVICES, ADDITIONAL CHARGES MAY BE INCURRED
19        FOR UNEXPECTED EXPENSES INCLUDING, BUT NOT LIMITED TO,
20        CASH ADVANCES, SHIPPING OF REMAINS FROM A DISTANT
21        PLACE, OR DESIGNATED HONORARIA ORDERED OR DIRECTED BY
22        SURVIVORS.
23            (B) Except as provided in subparagraph (C) of this
24        paragraph (3), each non-guaranteed price contract
25        shall contain the following statement in 12 point bold
26        type:

 

 

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1            THIS CONTRACT DOES NOT GUARANTEE THE PRICE THE
2        BENEFICIARY WILL PAY FOR ANY SPECIFIC GOODS OR
3        SERVICES. ANY FUNDS PAID UNDER THIS CONTRACT ARE ONLY A
4        DEPOSIT TO BE APPLIED TOWARD THE FINAL PRICE OF THE
5        GOODS OR SERVICES CONTRACTED FOR. ADDITIONAL CHARGES
6        MAY BE REQUIRED.
7            (C) If a non-guaranteed price contract may
8        subsequently become guaranteed, the contract shall
9        clearly disclose the nature of the guarantee and the
10        time, occurrence, or event upon which the contract
11        shall become a guaranteed price contract.
12        (4) It provides that if the particular supplies and
13    services specified in the pre-need contract are
14    unavailable at the time of delivery, the provider shall be
15    required to furnish supplies and services similar in style
16    and at least equal in quality of material and workmanship.
17        (5) It discloses any penalties or restrictions,
18    including but not limited to geographic restrictions or the
19    inability of the provider to perform, on the delivery of
20    merchandise, services, or pre-need contract guarantees.
21        (6) Regardless of the method of funding the pre-need
22    contract, the following must be disclosed:
23            (A) Whether the pre-need contract is to be funded
24        by a trust, life insurance, or an annuity;
25            (B) The nature of the relationship among the person
26        funding the pre-need contract, the provider, and the

 

 

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1        seller; and
2            (C) The impact on the pre-need contract of (i) any
3        changes in the funding arrangement including but not
4        limited to changes in the assignment, beneficiary
5        designation, or use of the funds; (ii) any specific
6        penalties to be incurred by the contract purchaser as a
7        result of failure to make payments; (iii) penalties to
8        be incurred or moneys or refunds to be received as a
9        result of cancellations; and (iv) all relevant
10        information concerning what occurs and whether any
11        entitlements or obligations arise if there is a
12        difference between the proceeds of the particular
13        funding arrangement and the amount actually needed to
14        pay for the funeral at-need.
15            (D) The method of changing the provider.
16    (b) All pre-need contracts are subject to the Federal Trade
17Commission Rule concerning the Cooling-Off Period for
18Door-to-Door Sales (16 CFR Part 429).
19    (c) No pre-need contract shall be sold in this State unless
20there is a provider for the services and personal property
21being sold. If the seller is not a provider, then the seller
22must have a binding agreement with a provider, and the identity
23of the provider and the nature of the agreement between the
24seller and the provider shall be disclosed in the pre-need
25contract at the time of the sale and before the receipt of any
26sales proceeds. The failure to disclose the identity of the

 

 

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1provider, the nature of the agreement between the seller and
2the provider, or any changes thereto to the purchaser and
3beneficiary, or the failure to make the disclosures required in
4subdivision (a)(1), constitutes an intentional violation of
5this Act.
6    (d) All pre-need contracts must be in writing in at least
711 point type, numbered, and executed in duplicate. A signed
8copy of the pre-need contract must be provided to the purchaser
9at the time of entry into the pre-need contract. The
10Comptroller may by rule develop a model pre-need contract form
11that meets the requirements of this Act.
12    (e) The State Comptroller shall by rule develop a booklet
13for consumers in plain English describing the scope,
14application, and consumer protections of this Act. After the
15adoption of these rules, no pre-need contract shall be sold in
16this State unless (i) the seller distributes to the purchaser
17prior to the sale a booklet promulgated or approved for use by
18the State Comptroller; (ii) the seller explains to the
19purchaser the terms of the pre-need contract prior to the
20purchaser signing; and (iii) the purchaser initials a statement
21in the contract confirming that the seller has explained the
22terms of the contract prior to the purchaser signing.
23    (f) All sales proceeds received in connection with a
24pre-need contract shall be deposited into a trust account as
25provided in Section 1b and Section 2 of this Act, or shall be
26used to purchase a life insurance policy or tax-deferred

 

 

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1annuity as provided in Section 2a of this Act.
2    (g) No pre-need contract shall be sold in this State unless
3it is accompanied by a funding mechanism permitted under this
4Act, and unless the seller is licensed by the Comptroller as
5provided in Section 3 of this Act. Nothing in this Act is
6intended to relieve sellers of pre-need contracts from being
7licensed under any other Act required for their profession or
8business, and being subject to the rules promulgated to
9regulate their profession or business, including rules on
10solicitation and advertisement.
11(Source: P.A. 96-879, eff. 2-2-10.)
 
12    (225 ILCS 45/1b)  (from Ch. 111 1/2, par. 73.101b)
13    Sec. 1b. (a) Whenever a seller receives sales proceeds
14under a pre-need contract that the purchaser elects to fund by
15a trust agreement, the seller may retain an initial amount
16equal to 5% of the purchase price of the services, personal
17property or merchandise, or 15% of the purchase price of outer
18burial containers. Thereafter, a seller shall deposit into
19trust the amounts specified in this Section so that no later
20than upon the final payment on the contract, the trust shall
21equal or exceed 95% of the purchase price of all services,
22personal property, or merchandise, except for outer burial
23containers, and 85% of the purchase price of outer burial
24containers.
25    (b) In the event that sales proceeds to be deposited into a

 

 

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1trust are received pursuant to a cash sale or an installment
2contract, the seller may retain the initial percentage
3authorized by subsection (a) of this Section, and thereafter
4shall deposit into the trust the entire balance of sales
5proceeds received.
6    (c) In the event that the deposits into a trust required by
7this Section do not, after final payment by the consumer,
8result in the trust containing at least 95% of the purchase
9price of all services, personal property or merchandise, except
10for outer burial containers and 85% of the purchase price of
11outer burial containers, the seller shall make an additional
12deposit into the trust in an amount sufficient to meet these
13percentages.
14    (d) The trustee may not be the seller or provider of
15funeral services or merchandise unless the seller holds sales
16of less than $500,000 in trust, and deposits funds for which
17the seller is acting as trustee in (1) withdrawable accounts of
18State chartered or federally chartered savings and loan
19associations insured by the Federal Deposit Insurance
20Corporation; (2) deposits or certificates of deposits in State
21or federal banks insured by the Federal Deposit Insurance
22Corporation; or (3) share accounts or share certificate
23accounts in a State or federal credit union, the accounts of
24which are insured as required by the Illinois Credit Union Act
25or the Federal Credit Union Act, as applicable.
26(Source: P.A. 96-879, eff. 2-2-10.)
 

 

 

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1    (225 ILCS 45/2)  (from Ch. 111 1/2, par. 73.102)
2    Sec. 2. (a) If a purchaser selects a trust arrangement to
3fund the pre-need contract, all trust deposits as determined by
4Section 1b shall be made within 30 days of receipt.
5    (b) A trust established under this Act must be maintained:
6        (1) in a deposit account maintained by the seller as
7    trustee in a bank, savings and loan association, savings
8    bank, or credit union authorized to do business in Illinois
9    in which accounts are insured by an agency of the federal
10    government;
11        (2) in a trust company authorized to do business in
12    Illinois; or
13        (3) with a corporate fiduciary as defined in Section
14    1-5.05 of the Corporate Fiduciary Act.
15    (c) Trust agreements and amendments to the trust agreements
16used to fund a pre-need contract shall be filed with the
17Comptroller.
18    (d) (Blank).
19    (e) A seller or provider shall furnish to the trustee and
20depositary the name of each payor and the amount of payment on
21each such account for which deposit is being so made. Nothing
22shall prevent the trustee or a seller or provider acting as a
23trustee in accordance with this Act from commingling the
24deposits in any such trust fund for purposes of its management
25and the investment of its funds as provided in the Common Trust

 

 

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1Fund Act. In addition, multiple trust funds maintained under
2this Act may be commingled or commingled with other funeral or
3burial related trust funds if all record keeping requirements
4imposed by law are met.
5    (f) Trust funds may be maintained in a financial
6institution described in subsection (b) that is located in a
7state adjoining this State where: (1) the financial institution
8is located within 50 miles of the border of this State, (2) its
9accounts are federally insured, and (3) it has registered with
10the Illinois Secretary of State for purposes of service of
11process. (Blank).
12    (g) Upon no less than 30 days prior notice to the
13Comptroller, the seller may change the trustee of the fund.
14Failure to provide the Comptroller with timely prior notice is
15an intentional violation of this Act.
16    (h) A trustee shall at least annually furnish to each
17purchaser a statement containing: (1) the receipts,
18disbursements, and inventory of the trust, including an
19explanation of any fees or expenses charged by the trustee
20under Section 5 of this Act or otherwise, (2) an explanation of
21the purchaser's right to a refund, if any, under this Act, and
22(3) identifying the primary regulator of the trust as a
23corporate fiduciary under state or federal law.
24(Source: P.A. 96-879, eff. 2-2-10.)
 
25    (225 ILCS 45/4a)

 

 

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1    Sec. 4a. Investment of funds.
2    (a) A trustee has a duty to invest and manage the trust
3and, with respect to the investment of trust funds, shall
4exercise the judgment and care under the circumstances then
5prevailing that persons of prudence, discretion, and
6intelligence exercise in the management of their own affairs,
7not in regard to speculation, but in regard to the permanent
8disposition of their funds, considering the probable income as
9well as the probable safety of their capital. If the amount of
10the funds to be entrusted exceeds $1,000,000, then the trustee
11has the duty to manage and invest the assets pursuant to the
12Prudent Investor Rule under the Trusts and Trustees Act.
13    (b) The trust shall be a single-purpose trust fund. In the
14event of the seller's bankruptcy, insolvency or assignment for
15the benefit of creditors, or an adverse judgment, the trust
16funds shall not be available to any creditor as assets of the
17seller or to pay any expenses of any bankruptcy or similar
18proceeding, but shall be distributed to the purchasers or
19managed for their benefit by the trustee holding the funds.
20Except in an action by the Comptroller to revoke a license
21issued pursuant to this Act and for creation of a receivership
22as provided in this Act, the trust shall not be subject to
23judgment, execution, garnishment, attachment, or other seizure
24by process in bankruptcy or otherwise, nor to sale, pledge,
25mortgage, or other alienation, and shall not be assignable
26except as approved by the Comptroller. The changes made by

 

 

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1Public Act 91-7 are intended to clarify existing law regarding
2the inability of licensees to pledge the trust.
3    (c) Because it is not known at the time of deposit or at
4the time that income is earned on the trust account to whom the
5principal and the accumulated earnings will be distributed for
6the purpose of determining the Illinois income tax due on these
7trust funds, the principal and any accrued earnings or losses
8related to each individual account shall be held in suspense
9until the final determination is made as to whom the account
10shall be paid. The beneficiary's estate shall not be
11responsible for any funeral and burial purchases listed in a
12pre-need contract if the pre-need contract is entered into on a
13guaranteed price basis.
14    If a pre-need contract is not a guaranteed price contract,
15then to the extent the proceeds of a non-guaranteed price
16pre-need contract cover the funeral and burial expenses for the
17beneficiary, no claim may be made against the estate of the
18beneficiary. A claim may be made against the beneficiary's
19estate if the charges for the funeral services and merchandise
20at the time of use exceed the amount of the amount in trust
21plus the percentage of the sale proceeds initially retained by
22the seller or the face value of the life insurance policy or
23tax-deferred annuity.
24(Source: P.A. 96-879, eff. 2-2-10.)
 
25    Section 10. The Illinois Pre-Need Cemetery Sales Act is

 

 

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1amended by changing Sections 14 and 15 as follows:
 
2    (815 ILCS 390/14)  (from Ch. 21, par. 214)
3    Sec. 14. Contract required.
4    (a) It is unlawful for any person doing business within
5this State to accept sales proceeds, either directly or
6indirectly, by any means unless the seller enters into a
7pre-need sales contract with the purchaser which meets the
8following requirements:
9        (1) A written sales contract shall be executed in at
10    least 11 point type in duplicate for each pre-need sale
11    made by a licensee, and a signed copy given to the
12    purchaser. Each completed contract shall be numbered and
13    shall contain: (i) the name and address of the purchaser,
14    the principal office of the licensee, and the parent
15    company of the licensee; (ii) the name of the person, if
16    known, who is to receive the cemetery merchandise, cemetery
17    services or the completed interment, entombment or
18    inurnment spaces under the contract; and (iii) specific
19    identification of such merchandise, services or spaces to
20    be provided, if a specific space or spaces are contracted
21    for, and the price of the merchandise, services, or space
22    or spaces.
23        (2) In addition, such contracts must contain a
24    provision in distinguishing typeface as follows:
25        "Notwithstanding anything in this contract to the

 

 

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1    contrary, you are afforded certain specific rights of
2    cancellation and refund under the Illinois Pre-Need
3    Cemetery Sales Act, enacted by the 84th General Assembly of
4    the State of Illinois".
5        (3) All pre-need sales contracts shall be sold on a
6    guaranteed price basis. At the time of performance of the
7    service or delivery of the merchandise, the seller shall be
8    prohibited from assessing the purchaser or his heirs or
9    assigns or duly authorized representative any additional
10    charges for the specific merchandise and services listed on
11    the pre-need sales contract.
12        (4) Each contract shall clearly disclose that the price
13    of the merchandise or services is guaranteed and shall
14    contain the following statement in 12 point bold type:
15        "THIS CONTRACT GUARANTEES THE BENEFICIARY THE SPECIFIC
16    GOODS, SERVICES, INTERMENT SPACES, ENTOMBMENT SPACES, AND
17    INURNMENT SPACES CONTRACTED FOR. NO ADDITIONAL CHARGES MAY
18    BE REQUIRED FOR DESIGNATED GOODS, SERVICES, AND SPACES.
19    ADDITIONAL CHARGES MAY BE INCURRED FOR UNEXPECTED
20    EXPENSES."
21        (5) The pre-need sales contract shall provide that if
22    the particular cemetery services, cemetery merchandise, or
23    spaces specified in the pre-need contract are unavailable
24    at the time of delivery, the seller shall be required to
25    furnish services, merchandise, and spaces similar in style
26    and at least equal in quality of material and workmanship.

 

 

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1        (6) The pre-need contract shall also disclose any
2    specific penalties to be incurred by the purchaser as a
3    result of failure to make payments; and penalties to be
4    incurred or moneys or refunds to be received as a result of
5    cancellation of the contract.
6        (7) The pre-need contract shall disclose the nature of
7    the relationship between the provider and the seller.
8        (8) Each pre-need contract that authorizes the
9    delivery of cemetery merchandise to a licensed and bonded
10    warehouse shall provide that prior to or upon delivery of
11    the merchandise to the warehouse the title to the
12    merchandise and a warehouse receipt shall be delivered to
13    the purchaser or beneficiary. The pre-need contract shall
14    contain the following statement in 12 point bold type:
15    "THIS CONTRACT AUTHORIZES THE DELIVERY OF MERCHANDISE TO A
16    LICENSED AND BONDED WAREHOUSE FOR STORAGE OF THE
17    MERCHANDISE UNTIL THE MERCHANDISE IS NEEDED BY THE
18    BENEFICIARY. DELIVERY OF THE MERCHANDISE IN THIS MANNER MAY
19    PRECLUDE REFUND OF SALE PROCEEDS THAT ARE ATTRIBUTABLE TO
20    THE DELIVERED MERCHANDISE."
21        The purchaser shall initial the statement at the time
22    of entry into the pre-need contract.
23        (9) Each pre-need contract that authorizes the
24    placement of cemetery merchandise at the site of its
25    ultimate use prior to the time that the merchandise is
26    needed by the beneficiary shall contain the following

 

 

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1    statement in 12 point bold type:
2    "THIS CONTRACT AUTHORIZES THE PLACEMENT OF MERCHANDISE AT
3    THE SITE OF ITS ULTIMATE USE PRIOR TO THE TIME THAT THE
4    MERCHANDISE IS NEEDED BY THE BENEFICIARY. DELIVERY OF THE
5    MERCHANDISE IN THIS MANNER MAY PRECLUDE REFUND OF SALE
6    PROCEEDS THAT ARE ATTRIBUTABLE TO THE DELIVERED
7    MERCHANDISE."
8        The purchaser shall initial the statement at the time
9    of entry into the pre-need contract.
10        (10) Each pre-need contract that is funded by a trust
11    shall clearly identify the trustee's name and address and
12    the primary state or federal regulator of the trustee as a
13    corporate fiduciary.
14    (b) Every pre-need sales contract must be in writing. The
15Comptroller may by rule develop a model pre-need sales contract
16form that meets the requirements of this Act.
17    (c) To the extent the Rule is applicable, every pre-need
18sales contract is subject to the Federal Trade Commission Rule
19concerning the Cooling-Off Period for Door-to-Door Sales (16
20CFR Part 429).
21    (d) No pre-need sales contract may be entered into in this
22State unless there is a provider for the cemetery merchandise,
23cemetery services, and undeveloped interment, inurnment, and
24entombment spaces being sold. If the seller is not the
25provider, then the seller must have a binding agreement with a
26provider, and the identity of the provider and the nature of

 

 

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1the agreement between the seller and the provider must be
2disclosed in the pre-need sales contract at the time of sale
3and before the receipt of any sale proceeds. The failure to
4disclose the identity of the provider, the nature of the
5agreement between the seller and the provider, or any changes
6thereto to the purchaser and beneficiary, or the failure to
7make the disclosures required by this Section constitutes an
8intentional violation of this Act.
9    (e) No pre-need contract may be entered into in this State
10unless it is accompanied by a funding mechanism permitted under
11this Act and unless the seller is licensed by the Comptroller
12as provided in this Act. Nothing in this Act is intended to
13relieve providers or sellers of pre-need contracts from being
14licensed under any other Act required for their profession or
15business or from being subject to the rules promulgated to
16regulate their profession or business, including rules on
17solicitation and advertisement.
18    (f) No pre-need contract may be entered into in this State
19unless the seller explains to the purchaser the terms of the
20pre-need contract prior to the purchaser signing and the
21purchaser initials a statement in the contract confirming that
22the seller has explained the terms of the contract prior to the
23purchaser signing.
24    (g) The State Comptroller shall develop a booklet for
25consumers in plain English describing the scope, application,
26and consumer protections of this Act. After the booklet is

 

 

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1developed, no pre-need contract may be sold in this State
2unless the seller distributes to the purchaser prior to the
3sale a booklet developed or approved for use by the State
4Comptroller.
5(Source: P.A. 96-879, eff. 2-2-10.)
 
6    (815 ILCS 390/15)  (from Ch. 21, par. 215)
7    Sec. 15. (a) Whenever a seller receives anything of value
8under a pre-need sales contract, the person receiving such
9value shall deposit 50% of all proceeds received into one or
10more trust funds maintained pursuant to this Section, except
11that, in the case of proceeds received for the purchase of
12outer burial containers, 85% of the proceeds shall be deposited
13into one or more trust funds. Such deposits shall be made until
14the amount deposited in trust equals 50% of the sales price of
15the cemetery merchandise, cemetery services and undeveloped
16spaces included in such contract, except that, in the case of
17deposits for outer burial containers, deposits shall be made
18until the amount deposited in trust equals 85% of the sales
19price. In the event an installment contract is factored,
20discounted or sold to a third party, the seller shall deposit
21an amount equal to 50% of the sales price of the installment
22contract, except that, for the portion of the contract
23attributable to the sale of outer burial containers, the seller
24shall deposit an amount equal to 85% of the sales price.
25Proceeds required to be deposited in trust which are

 

 

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1attributable to cemetery merchandise and cemetery services
2shall be held in a "Cemetery Merchandise Trust Fund". Proceeds
3required to be deposited in trust which are attributable to the
4sale of undeveloped interment, entombment or inurnment spaces
5shall be held in a "Pre-construction Trust Fund". If
6merchandise is delivered for storage in a bonded warehouse, as
7authorized herein, and payment of transportation or other
8charges totaling more than $20 will be required in order to
9secure delivery to the site of ultimate use, upon such delivery
10to the warehouse the seller shall deposit to the trust fund the
11full amount of the actual or estimated transportation charge.
12Transportation charges which have been prepaid by the seller
13shall not be deposited to trust funds maintained pursuant to
14this Section. As used in this Section, "all proceeds" means the
15entire amount paid by a purchaser in connection with a pre-need
16sales contract, including finance charges and Cemetery Care Act
17contributions, but excluding sales taxes and credit life
18insurance premiums.
19    (b) The seller shall act as trustee of all amounts received
20for cemetery merchandise, services, or undeveloped spaces
21until those amounts have been deposited into the trust fund.
22All trust deposits required by this Act shall be made within 30
23days following the end of the month of receipt. The seller must
24retain a corporate fiduciary as an independent trustee for any
25amount of trust funds. Upon 30 days' prior written notice from
26the seller to the Comptroller, the seller may change the

 

 

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1trustee of the trust fund. Failure to provide the Comptroller
2with timely prior notice is an intentional violation of this
3Act.
4    (c) A trust established under this Act must be maintained:
5        (1) in a deposit account maintained by the seller as
6    trustee in a bank, savings and loan association, or credit
7    union authorized to do business in Illinois where such
8    accounts are insured by an agency of the federal
9    government;
10        (2) in a trust company authorized to do business in
11    Illinois; or
12        (3) in an investment company authorized to do business
13    in Illinois insured by the Securities Brokers Insurance
14    Corporation. with a corporate fiduciary as defined in
15    Section 1-5.05 of the Corporate Fiduciary Act.
16    (d) Funds deposited in the trust account shall be
17identified in the records of the seller by the name of the
18purchaser. Nothing shall prevent the trustee from commingling
19the deposits in any such trust fund for purposes of the
20management thereof and the investment of funds therein as
21provided in the "Common Trust Fund Act", approved June 24,
221949, as amended. In addition, multiple trust funds maintained
23pursuant to this Act may be commingled or commingled with other
24funeral or burial related trust funds, provided that all record
25keeping requirements imposed by or pursuant to law are met.
26    (e) In lieu of a pre-construction trust fund, a seller of

 

 

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1undeveloped interment, entombment or inurnment spaces may
2obtain and file with the Comptroller a performance bond in an
3amount at least equal to 50% of the sales price of the
4undeveloped spaces or the estimated cost of completing
5construction, whichever is greater. The bond shall be
6conditioned on the satisfactory construction and completion of
7the undeveloped spaces as required in Section 19 of this Act.
8    Each bond obtained under this Section shall have as surety
9thereon a corporate surety company incorporated under the laws
10of the United States, or a State, the District of Columbia or a
11territory or possession of the United States. Each such
12corporate surety company must be authorized to provide
13performance bonds as required by this Section, have paid-up
14capital of at least $250,000 in cash or its equivalent and be
15able to carry out its contracts. Each pre-need seller must
16provide to the Comptroller, for each corporate surety company
17such seller utilizes, a statement of assets and liabilities of
18the corporate surety company sworn to by the president and
19secretary of the corporation by January 1 of each year.
20    The Comptroller shall prohibit pre-need sellers from doing
21new business with a corporate surety company if the company is
22insolvent or is in violation of this Section. In addition the
23Comptroller may direct a pre-need seller to reinstate a
24pre-construction trust fund upon the Comptroller's
25determination that the corporate surety company no longer is
26sufficient security.

 

 

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1    All performance bonds issued pursuant to this Section must
2be irrevocable during the statutory term for completing
3construction specified in Section 19 of this Act, unless
4terminated sooner by the completion of construction.
5    (f) Whenever any pre-need contract shall be entered into
6and include 1) items of cemetery merchandise and cemetery
7services, and 2) rights to interment, inurnment or entombment
8in completed spaces without allocation of the gross sale price
9among the items sold, the application of payments received
10under the contract shall be allocated, first to the right to
11interment, inurnment or entombment, second to items of cemetery
12merchandise and cemetery services, unless some other
13allocation is clearly provided in the contract.
14    (g) Any person engaging in pre-need sales who enters into a
15combination sale which involves the sale of items covered by a
16trust or performance bond requirement and any item not covered
17by any entrustment or bond requirement, shall be prohibited
18from increasing the gross sales price of those items not
19requiring entrustment with the purpose of allocating a lesser
20gross sales price to items which require a trust deposit or a
21performance bond.
22(Source: P.A. 96-879, eff. 2-2-10.)
 
23    Section 99. Effective date. This Act takes effect upon
24becoming law.

 

 

HB0229- 23 -LRB097 02678 CEL 42697 b

1 INDEX
2 Statutes amended in order of appearance
3    225 ILCS 45/1from Ch. 111 1/2, par. 73.101
4    225 ILCS 45/1a-1
5    225 ILCS 45/1bfrom Ch. 111 1/2, par. 73.101b
6    225 ILCS 45/2from Ch. 111 1/2, par. 73.102
7    225 ILCS 45/4a
8    815 ILCS 390/14from Ch. 21, par. 214
9    815 ILCS 390/15from Ch. 21, par. 215