Full Text of SB3171 97th General Assembly
SB3171 97TH GENERAL ASSEMBLY |
| | 97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012 SB3171 Introduced 2/1/2012, by Sen. John M. Sullivan SYNOPSIS AS INTRODUCED: |
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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.
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| | A BILL FOR |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Funeral or Burial Funds Act is | 5 | | amended 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 | 8 | | otherwise provided in
this Section, all sales proceeds
paid to | 9 | | any person, partnership, association
or corporation with | 10 | | respect to merchandise or services covered by this Act,
upon | 11 | | any agreement or contract, or any series or combination
of | 12 | | agreements or contracts, which has for a purpose the furnishing | 13 | | or
performance of funeral services, or the furnishing or | 14 | | delivery of any
personal property, merchandise, or services of | 15 | | any nature in connection
with the final disposition of a dead | 16 | | human body, including, but not
limited to, outer burial | 17 | | containers, urns, combination casket-vault units,
caskets and | 18 | | clothing, for future use at a time determinable by the death of | 19 | | the
person or persons whose body or bodies are to be so | 20 | | disposed of, shall be held
to be trust funds, and shall be | 21 | | placed in trust in accordance with Sections 1b
and 2, or shall | 22 | | be used to purchase life insurance or annuities in accordance
| 23 | | with Section 2a. The person, partnership, association or |
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| 1 | | corporation receiving
said payments under a pre-need contract | 2 | | is hereby declared to be a trustee
thereof until deposits of | 3 | | funds are made in accordance with Section 1b or 2a of
this Act. | 4 | | Persons holding less than $500,000 in trust funds may continue | 5 | | to act as the trustee after the funds are deposited in | 6 | | accordance with subsection (d) of Section 1b.
| 7 | | Nothing in this Act shall be construed to prohibit the | 8 | | inclusion of outer
burial containers in sales contracts under | 9 | | the 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
| 14 | | within
this State to accept sales proceeds from a purchaser, | 15 | | either directly or
indirectly by any means, unless the seller | 16 | | enters into a
pre-need contract
with the purchaser which meets | 17 | | the 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 | 17 | | Commission Rule
concerning the Cooling-Off Period for | 18 | | Door-to-Door Sales (16 CFR Part 429).
| 19 | | (c) No pre-need contract shall be sold in this State unless
| 20 | | there is a provider for the services and personal property | 21 | | being
sold. If the seller is not a provider, then the seller | 22 | | must have a binding agreement with a provider, and
the identity | 23 | | of the provider and the nature of the agreement between the | 24 | | seller
and the provider shall be disclosed in the pre-need | 25 | | contract at the time of the
sale and before the receipt of any | 26 | | sales proceeds. The failure to disclose the
identity of the |
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| 1 | | provider, the nature of the agreement between the seller and
| 2 | | the provider, or any changes thereto to the purchaser and | 3 | | beneficiary, or the
failure to make the disclosures required in | 4 | | subdivision (a)(1), constitutes an
intentional violation of | 5 | | this Act.
| 6 | | (d) All pre-need contracts must be in writing in at least | 7 | | 11 point type,
numbered, and executed in duplicate. A signed
| 8 | | copy of the pre-need contract must be provided to the purchaser | 9 | | at the time of
entry into the pre-need contract. The | 10 | | Comptroller may by rule develop
a model pre-need contract form | 11 | | that meets the requirements of this Act.
| 12 | | (e) The State Comptroller shall by rule develop a booklet | 13 | | for
consumers in plain English describing
the scope, | 14 | | application, and consumer protections of this Act. After the
| 15 | | adoption of these rules, no pre-need contract shall be sold in | 16 | | this State
unless (i) the seller distributes to the purchaser | 17 | | prior to the sale a
booklet promulgated or approved for use by | 18 | | the State Comptroller; (ii) the
seller explains to the | 19 | | purchaser the terms of the pre-need contract prior to
the | 20 | | purchaser signing; and (iii) the purchaser initials a statement | 21 | | in the
contract confirming that the seller has explained the | 22 | | terms of the contract
prior to the purchaser signing.
| 23 | | (f) All sales proceeds received in connection with a | 24 | | pre-need
contract shall be deposited into a trust account as | 25 | | provided in
Section 1b and Section 2 of this Act, or shall be | 26 | | used to purchase a life
insurance policy or tax-deferred |
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| 1 | | annuity as provided in Section 2a
of this Act.
| 2 | | (g) No pre-need contract shall be sold in this State unless | 3 | | it is
accompanied by a funding mechanism permitted under this | 4 | | Act, and unless the
seller is licensed by the Comptroller as | 5 | | provided in Section 3
of this Act.
Nothing in this Act is | 6 | | intended to relieve sellers of pre-need
contracts from
being | 7 | | licensed under any other Act required for their profession or | 8 | | business,
and being subject to the rules promulgated to | 9 | | regulate their profession or
business, including rules on | 10 | | solicitation 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 | 14 | | under a pre-need
contract that the purchaser elects to fund by | 15 | | a trust agreement, the seller may
retain an initial amount | 16 | | equal to 5% of the purchase price of the services,
personal | 17 | | property or merchandise, or 15% of the purchase price of outer | 18 | | burial
containers. Thereafter, a seller shall deposit into | 19 | | trust the amounts specified
in this Section so that no later | 20 | | than upon the final payment on the contract,
the trust shall | 21 | | equal or exceed 95% of the purchase price of all services,
| 22 | | personal property, or merchandise, except for outer burial | 23 | | containers, and 85%
of the purchase price of outer burial | 24 | | containers.
| 25 | | (b) In the event that sales proceeds to be deposited into a |
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| 1 | | trust are
received pursuant to a cash sale or an installment | 2 | | contract, the seller
may retain the initial percentage | 3 | | authorized by subsection (a) of this Section, and thereafter | 4 | | shall deposit into
the trust the entire balance of sales | 5 | | proceeds received.
| 6 | | (c) In the event that the deposits into a trust required by | 7 | | this Section do
not, after final payment by the consumer, | 8 | | result in the trust containing at
least 95% of the purchase | 9 | | price of all services, personal property or merchandise,
except | 10 | | for outer burial containers and 85% of the purchase price of | 11 | | outer
burial containers, the seller shall make an additional | 12 | | deposit into the trust
in an amount sufficient to meet these | 13 | | percentages.
| 14 | | (d) The trustee may not be the seller or provider of | 15 | | funeral services or
merchandise unless the seller holds sales
| 16 | | of less than $500,000 in trust, and deposits funds for which
| 17 | | the seller is acting as trustee in (1) withdrawable accounts of
| 18 | | State chartered or federally chartered savings and loan
| 19 | | associations insured by the Federal Deposit Insurance
| 20 | | Corporation; (2) deposits or certificates of deposits in State
| 21 | | or federal banks insured by the Federal Deposit Insurance
| 22 | | Corporation; or (3) share accounts or share certificate
| 23 | | accounts in a State or federal credit union, the accounts of
| 24 | | which are insured as required by the Illinois Credit Union Act
| 25 | | or 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 | 3 | | fund the
pre-need contract, all trust deposits as determined by | 4 | | Section 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 or with a foreign | 15 | | corporate fiduciary recognized by Article IV of the | 16 | | Corporate Fiduciary Act.
| 17 | | (c) Trust agreements and amendments to the trust agreements | 18 | | used to
fund a pre-need contract shall be filed with the | 19 | | Comptroller.
| 20 | | (d) (Blank).
| 21 | | (e) A seller or provider shall furnish to the trustee and | 22 | | depositary the
name of each payor and the amount of payment on | 23 | | each such account for which
deposit is being so made. Nothing | 24 | | shall prevent the trustee or a seller or provider acting as a
| 25 | | trustee in accordance with this Act from commingling the
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| 1 | | deposits in any such trust fund for purposes of its management | 2 | | and the
investment of its funds as provided in the Common Trust | 3 | | Fund Act. In addition,
multiple trust funds maintained under | 4 | | this Act may be commingled or commingled
with other funeral or | 5 | | burial related trust funds if all record keeping
requirements | 6 | | imposed by law are met.
| 7 | | (f) Trust funds may be maintained in a financial
| 8 | | institution described in subsection (b) that is located in a
| 9 | | state adjoining this State where: (1) the financial institution
| 10 | | is located within 50 miles of the border of this State, (2) its
| 11 | | accounts are federally insured, and (3) it has registered with
| 12 | | the Illinois Secretary of State for purposes of service of
| 13 | | process. (Blank).
| 14 | | (g) Upon no less than 30 days prior notice to the | 15 | | Comptroller, the seller may change
the trustee of
the fund. | 16 | | Failure to provide the Comptroller with timely prior notice is | 17 | | an intentional violation of this Act. | 18 | | (h) A trustee shall at least annually furnish to each | 19 | | purchaser a statement (1) containing the account value of the | 20 | | trust as of the date of the statement : (1) the receipts, | 21 | | disbursements, and inventory of the trust, including an | 22 | | explanation of any fees or expenses charged by the trustee | 23 | | under Section 5 of this Act or otherwise, (2) an explanation of | 24 | | the purchaser's right to a refund, if any, under this Act, and | 25 | | (2) (3) identifying the primary regulator of the trust as a | 26 | | corporate fiduciary under state or federal law .
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| 1 | | (Source: P.A. 96-879, eff. 2-2-10; 97-593, eff. 8-26-11.)
| 2 | | (225 ILCS 45/4a)
| 3 | | Sec. 4a. Investment of funds.
| 4 | | (a) A trustee has a duty to invest and manage the trust | 5 | | and, with respect to the investment of trust funds, shall | 6 | | exercise the judgment and care under the circumstances
then | 7 | | prevailing that persons of prudence, discretion, and
| 8 | | intelligence exercise in the management of their own affairs,
| 9 | | not in regard to speculation, but in regard to the permanent
| 10 | | disposition of their funds, considering the probable income as
| 11 | | well as the probable safety of their capital. If the amount of | 12 | | the funds to be entrusted exceeds $1,000,000, then the trustee | 13 | | has the duty to manage and invest the assets pursuant to the | 14 | | Prudent Investor Rule under the Trusts and Trustees Act.
| 15 | | (b) The trust shall be a single-purpose trust fund. In the | 16 | | event of the
seller's bankruptcy, insolvency or assignment for | 17 | | the benefit of creditors, or
an adverse judgment, the trust | 18 | | funds shall not be available to any creditor as
assets of the | 19 | | seller or to pay any expenses of any bankruptcy or similar
| 20 | | proceeding, but shall be distributed to the purchasers or | 21 | | managed for their
benefit by the trustee holding the funds. | 22 | | Except in an action by the
Comptroller to revoke a license | 23 | | issued pursuant
to this Act and for creation of a receivership | 24 | | as provided in this Act, the
trust shall not be subject to | 25 | | judgment, execution, garnishment, attachment,
or other seizure |
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| 1 | | by process in bankruptcy or otherwise, nor to sale, pledge,
| 2 | | mortgage, or other alienation, and shall not be assignable | 3 | | except as
approved by the Comptroller. The changes made by | 4 | | Public Act 91-7 are intended to clarify existing law regarding | 5 | | the
inability of licensees to pledge the trust.
| 6 | | (c) Because it is not known at the time of deposit or at | 7 | | the time that
income is earned on the trust account to whom the | 8 | | principal and the accumulated
earnings will be distributed for | 9 | | the purpose of determining the Illinois income
tax due on these | 10 | | trust funds, the principal and any accrued earnings or losses
| 11 | | related to each individual account shall be held in suspense | 12 | | until the final
determination is made as to whom the account | 13 | | shall be paid. The beneficiary's
estate shall not be | 14 | | responsible for any funeral and burial purchases listed in
a | 15 | | pre-need contract if the pre-need contract is entered into on a | 16 | | guaranteed
price basis.
| 17 | | If a pre-need contract is not a guaranteed price contract, | 18 | | then to the extent
the proceeds of a non-guaranteed price | 19 | | pre-need contract cover the funeral and
burial expenses for the | 20 | | beneficiary, no claim may be made against the estate of
the | 21 | | beneficiary. A claim may be made against the beneficiary's | 22 | | estate if the
charges for the funeral services and merchandise | 23 | | at the time of use exceed the
amount of the amount in trust | 24 | | plus the percentage of the sale proceeds
initially retained by | 25 | | the seller or the face value of the life insurance policy
or | 26 | | tax-deferred annuity.
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| 1 | | (Source: P.A. 96-879, eff. 2-2-10.)
| 2 | | Section 10. The Illinois Pre-Need Cemetery Sales Act is | 3 | | amended by changing Sections 14 and 15 as follows:
| 4 | | (815 ILCS 390/14) (from Ch. 21, par. 214)
| 5 | | Sec. 14. Contract required.
| 6 | | (a) It is unlawful for any person doing business within | 7 | | this
State to accept sales proceeds, either directly or | 8 | | indirectly, by any
means unless the seller enters into a | 9 | | pre-need sales
contract
with the
purchaser which meets the | 10 | | following requirements:
| 11 | | (1) A written sales contract shall be executed in at | 12 | | least 11 point
type in duplicate for
each pre-need sale | 13 | | made by a licensee, and a signed copy given to the
| 14 | | purchaser. Each completed contract shall be numbered and | 15 | | shall contain: (i)
the
name and address of the purchaser, | 16 | | the principal office
of the licensee, and the parent | 17 | | company of the licensee; (ii) the name
of the person,
if | 18 | | known, who
is to receive the cemetery merchandise, cemetery | 19 | | services or the
completed interment, entombment or | 20 | | inurnment spaces under the contract; and
(iii) specific | 21 | | identification of such
merchandise, services or spaces to | 22 | | be provided, if a specific space or spaces
are contracted | 23 | | for, and
the price of the merchandise, services, or space | 24 | | or spaces.
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| 1 | | (2) In addition,
such contracts must contain a | 2 | | provision in distinguishing typeface as follows:
| 3 | | "Notwithstanding anything in this contract to the | 4 | | contrary, you are
afforded certain specific rights of | 5 | | cancellation and refund under the Illinois Pre-Need | 6 | | Cemetery Sales Act, enacted by the 84th
General Assembly of | 7 | | the State of Illinois".
| 8 | | (3) All pre-need sales contracts shall be sold on a | 9 | | guaranteed price
basis.
At the time of performance of the | 10 | | service or delivery of the merchandise,
the seller shall be | 11 | | prohibited from assessing the purchaser or
his heirs or
| 12 | | assigns or duly authorized representative any additional | 13 | | charges for the
specific merchandise and services listed on | 14 | | the pre-need sales contract.
| 15 | | (4) Each contract shall clearly disclose that the price | 16 | | of the
merchandise or services is guaranteed and shall | 17 | | contain the following
statement in 12 point bold type:
| 18 | | "THIS CONTRACT GUARANTEES THE BENEFICIARY THE SPECIFIC | 19 | | GOODS,
SERVICES, INTERMENT SPACES, ENTOMBMENT SPACES, AND | 20 | | INURNMENT SPACES
CONTRACTED FOR. NO ADDITIONAL CHARGES MAY | 21 | | BE REQUIRED FOR
DESIGNATED GOODS, SERVICES, AND SPACES. | 22 | | ADDITIONAL CHARGES MAY
BE INCURRED FOR
UNEXPECTED | 23 | | EXPENSES."
| 24 | | (5) The pre-need sales contract shall provide that
if | 25 | | the particular cemetery services, cemetery
merchandise, or | 26 | | spaces specified in the pre-need
contract are unavailable |
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| 1 | | at the time of delivery, the
seller shall be required to | 2 | | furnish services,
merchandise, and spaces similar in style | 3 | | and at least
equal in quality of material and workmanship.
| 4 | | (6) The pre-need contract shall also disclose any
| 5 | | specific penalties to be incurred by the purchaser as a
| 6 | | result of failure to make payments; and penalties to be
| 7 | | incurred or moneys or refunds to be received as a result
of | 8 | | cancellation of the contract.
| 9 | | (7) The pre-need contract shall disclose the nature
of | 10 | | the relationship between the provider and the seller.
| 11 | | (8) Each pre-need contract that authorizes the | 12 | | delivery
of cemetery merchandise to a licensed and bonded | 13 | | warehouse
shall provide that prior to or upon delivery of | 14 | | the
merchandise to the warehouse
the title to the | 15 | | merchandise and a warehouse receipt shall
be delivered to | 16 | | the purchaser or beneficiary. The pre-need
contract shall | 17 | | contain the following statement in 12 point
bold type:
| 18 | | "THIS CONTRACT AUTHORIZES THE DELIVERY OF MERCHANDISE TO
A | 19 | | LICENSED AND BONDED WAREHOUSE FOR STORAGE OF THE
| 20 | | MERCHANDISE UNTIL THE MERCHANDISE IS NEEDED BY THE
| 21 | | BENEFICIARY. DELIVERY OF THE MERCHANDISE IN THIS MANNER MAY
| 22 | | PRECLUDE REFUND OF SALE PROCEEDS THAT ARE ATTRIBUTABLE TO
| 23 | | THE DELIVERED MERCHANDISE."
| 24 | | The purchaser shall initial the statement at the time | 25 | | of
entry into the pre-need contract.
| 26 | | (9) Each pre-need contract that authorizes the |
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| 1 | | placement
of cemetery merchandise at the site of its
| 2 | | ultimate use prior to the time that the merchandise is | 3 | | needed
by the beneficiary shall contain the following | 4 | | statement in
12 point bold type:
| 5 | | "THIS CONTRACT AUTHORIZES THE PLACEMENT OF MERCHANDISE
AT | 6 | | THE SITE OF ITS ULTIMATE USE PRIOR TO THE TIME THAT THE
| 7 | | MERCHANDISE IS NEEDED BY THE BENEFICIARY. DELIVERY OF THE
| 8 | | MERCHANDISE IN THIS MANNER MAY PRECLUDE REFUND OF SALE
| 9 | | PROCEEDS THAT ARE ATTRIBUTABLE TO THE DELIVERED
| 10 | | MERCHANDISE."
| 11 | | The purchaser shall initial the statement at the time | 12 | | of
entry into the pre-need contract.
| 13 | | (10) Each pre-need contract that is funded by a trust | 14 | | shall clearly identify the trustee's name and address and | 15 | | the primary state or federal regulator of the trustee as a | 16 | | corporate fiduciary . | 17 | | (b) Every pre-need sales contract must be in writing.
The | 18 | | Comptroller may by rule
develop a model pre-need sales contract | 19 | | form that meets the requirements
of this Act.
| 20 | | (c) To the extent the Rule is applicable, every pre-need | 21 | | sales
contract is subject to the Federal Trade Commission Rule | 22 | | concerning the
Cooling-Off Period for Door-to-Door Sales (16 | 23 | | CFR Part 429).
| 24 | | (d) No pre-need sales contract may be entered into in
this | 25 | | State unless there is a provider for the cemetery
merchandise, | 26 | | cemetery services, and undeveloped interment,
inurnment, and |
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| 1 | | entombment spaces being sold. If the seller
is not the | 2 | | provider, then the seller must have a binding
agreement with a | 3 | | provider, and the identity of the provider
and the nature of | 4 | | the agreement between the seller and the
provider must be | 5 | | disclosed in the pre-need sales contract
at the time of sale | 6 | | and before the receipt of any sale
proceeds. The failure to | 7 | | disclose the identity of the
provider, the nature of the | 8 | | agreement between the seller
and the provider, or any changes | 9 | | thereto to the purchaser
and beneficiary, or the failure to | 10 | | make the disclosures
required by this Section constitutes an | 11 | | intentional
violation of this Act.
| 12 | | (e) No pre-need contract may be entered into in this
State | 13 | | unless it is accompanied by a funding mechanism
permitted under | 14 | | this Act and unless the seller is
licensed by the Comptroller | 15 | | as provided in this Act.
Nothing in this Act is intended to | 16 | | relieve providers or
sellers of pre-need contracts from being | 17 | | licensed under any
other Act required for their profession or | 18 | | business or from
being subject to the rules promulgated to | 19 | | regulate their
profession or business, including rules on | 20 | | solicitation and
advertisement.
| 21 | | (f) No pre-need contract may be entered into in this
State | 22 | | unless the seller explains to the
purchaser the terms of the | 23 | | pre-need contract prior to the
purchaser signing and the | 24 | | purchaser initials a statement in the contract
confirming that | 25 | | the seller has explained the terms of the contract prior to the
| 26 | | purchaser signing.
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| 1 | | (g) The State Comptroller shall develop a booklet for
| 2 | | consumers in plain English describing the scope,
application, | 3 | | and consumer protections of this Act. After
the booklet is | 4 | | developed, no pre-need contract may be
sold in this State | 5 | | unless the seller
distributes to the purchaser prior to the | 6 | | sale a booklet
developed or approved for use by the State | 7 | | Comptroller.
| 8 | | (Source: P.A. 96-879, eff. 2-2-10.)
| 9 | | (815 ILCS 390/15) (from Ch. 21, par. 215)
| 10 | | Sec. 15.
(a) Whenever a seller receives anything of value | 11 | | under a
pre-need sales contract, the person receiving such | 12 | | value shall deposit 50%
of all proceeds received into one or | 13 | | more trust funds maintained pursuant
to this Section, except | 14 | | that, in the case of proceeds received for the
purchase of | 15 | | outer burial containers, 85% of the proceeds shall be deposited
| 16 | | into one or more trust funds. Such deposits shall be made until | 17 | | the amount
deposited in
trust equals 50% of the sales price of | 18 | | the cemetery merchandise, cemetery
services and undeveloped | 19 | | spaces included in such contract, except that, in
the case of | 20 | | deposits for outer burial containers, deposits shall be made | 21 | | until
the amount deposited in trust equals 85% of the sales | 22 | | price. In the event
an
installment contract is factored, | 23 | | discounted or sold to a third party, the
seller shall deposit | 24 | | an amount equal to 50% of the sales price of the
installment | 25 | | contract, except that, for the portion of the contract
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| 1 | | attributable to the sale of outer burial containers, the seller | 2 | | shall deposit
an amount equal to 85% of the sales price. | 3 | | Proceeds required to be deposited
in trust which
are
| 4 | | attributable to cemetery merchandise and cemetery services | 5 | | shall be held
in a "Cemetery Merchandise Trust Fund". Proceeds | 6 | | required to be deposited
in trust which are attributable to the | 7 | | sale of undeveloped interment,
entombment or inurnment spaces | 8 | | shall be held in a "Pre-construction Trust
Fund". If | 9 | | merchandise is delivered for storage in a bonded warehouse, as
| 10 | | authorized herein, and payment of transportation or other | 11 | | charges totaling
more than $20 will be required in order to | 12 | | secure delivery to the site of
ultimate use, upon such delivery | 13 | | to the warehouse the seller shall deposit
to the trust fund the | 14 | | full amount of the actual or estimated transportation
charge. | 15 | | Transportation charges which have been prepaid by the seller
| 16 | | shall not be deposited to trust funds maintained pursuant to | 17 | | this Section.
As used in this Section, "all proceeds" means the | 18 | | entire amount paid by a
purchaser in connection with a pre-need | 19 | | sales contract, including finance
charges and Cemetery Care Act | 20 | | contributions, but excluding sales taxes
and credit life | 21 | | insurance premiums.
| 22 | | (b) The seller shall act as trustee of all amounts received | 23 | | for cemetery merchandise, services, or undeveloped spaces | 24 | | until those amounts have been deposited into the trust fund. | 25 | | All trust deposits required by this Act shall be made within 30 | 26 | | days
following the end of the month of receipt. The seller must |
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| 1 | | retain a corporate fiduciary as an independent trustee for any | 2 | | amount of trust funds. Upon 30 days' prior written notice from | 3 | | the seller to the Comptroller, the seller may change the | 4 | | trustee of the trust fund. Failure to provide the Comptroller | 5 | | with timely prior notice is an intentional violation of this | 6 | | Act.
| 7 | | (c) A trust established under this Act must be maintained : | 8 | | (1) in a deposit account maintained by the seller as | 9 | | trustee in a bank, savings
and loan association, or credit | 10 | | union authorized to do
business in Illinois where such | 11 | | accounts are insured by an
agency of the federal | 12 | | government; | 13 | | (2) in a trust company authorized to do business in
| 14 | | Illinois; | 15 | | (3) in an investment company authorized to do business
| 16 | | in Illinois insured by the Securities Brokers Insurance
| 17 | | Corporation; or | 18 | | (4) with a corporate fiduciary as defined in Section | 19 | | 1-5.05 of the Corporate Fiduciary Act or with a foreign | 20 | | corporate fiduciary recognized by Article IV of the | 21 | | Corporate Fiduciary Act.
| 22 | | (d) Funds deposited in the trust account shall be | 23 | | identified in the records
of the seller by the name of the | 24 | | purchaser. Nothing shall prevent the trustee
from commingling | 25 | | the deposits in any such trust fund for purposes of the
| 26 | | management thereof and the investment of funds therein as |
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| 1 | | provided in the
"Common Trust Fund Act", approved June 24, | 2 | | 1949, as amended. In addition,
multiple trust funds maintained | 3 | | pursuant to this Act may be commingled or
commingled with other | 4 | | funeral or burial related trust funds, provided that
all record | 5 | | keeping requirements imposed by or pursuant to law are met.
| 6 | | (e) In lieu of a pre-construction trust fund, a seller of | 7 | | undeveloped
interment, entombment or inurnment spaces may | 8 | | obtain and file with the
Comptroller a performance bond in an | 9 | | amount at least equal to 50% of the
sales price of the | 10 | | undeveloped spaces or the estimated cost of completing
| 11 | | construction, whichever is greater. The bond shall be | 12 | | conditioned on the
satisfactory construction and completion of | 13 | | the undeveloped spaces as
required in Section 19 of this Act.
| 14 | | Each bond obtained under this Section shall have as surety | 15 | | thereon a
corporate surety company incorporated under the laws | 16 | | of the United States,
or a State, the District of Columbia or a | 17 | | territory or possession of the
United States. Each such | 18 | | corporate surety company must be authorized to
provide | 19 | | performance bonds as required by this Section, have paid-up
| 20 | | capital of at least $250,000 in cash or its equivalent and be | 21 | | able to carry
out its contracts. Each pre-need seller must | 22 | | provide to the Comptroller,
for each corporate surety company | 23 | | such
seller utilizes, a statement of assets and liabilities of | 24 | | the corporate
surety company sworn to by the president and | 25 | | secretary
of the corporation by January 1 of each year.
| 26 | | The Comptroller shall prohibit pre-need sellers from doing |
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| 1 | | new business
with a corporate surety company if the company is | 2 | | insolvent or is in
violation of this Section. In addition the | 3 | | Comptroller may direct a
pre-need seller to reinstate a | 4 | | pre-construction trust fund upon the
Comptroller's | 5 | | determination that the corporate surety company no longer is
| 6 | | sufficient security.
| 7 | | All performance bonds issued pursuant to this Section must | 8 | | be irrevocable
during the statutory term for completing | 9 | | construction specified in Section
19 of this Act, unless | 10 | | terminated sooner by the completion of construction.
| 11 | | (f) Whenever any pre-need contract shall be entered into | 12 | | and include 1)
items of cemetery merchandise and cemetery | 13 | | services, and 2) rights to
interment, inurnment or entombment | 14 | | in completed spaces without allocation
of the gross sale price | 15 | | among the items sold, the application of payments
received | 16 | | under the contract shall be allocated, first to the right to
| 17 | | interment, inurnment or entombment, second to items of cemetery | 18 | | merchandise
and cemetery services, unless some other | 19 | | allocation is clearly provided
in the contract.
| 20 | | (g) Any person engaging in pre-need sales who enters into a | 21 | | combination
sale which involves the sale of items covered by a | 22 | | trust or performance
bond requirement and any item not covered | 23 | | by any entrustment or bond
requirement, shall be prohibited | 24 | | from increasing the gross sales price of
those items not | 25 | | requiring entrustment with the purpose of allocating a
lesser | 26 | | gross sales price to items which require a trust deposit or a
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| 1 | | performance bond.
| 2 | | (Source: P.A. 96-879, eff. 2-2-10; 97-593, eff. 8-26-11.)
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| 1 | |
INDEX
| 2 | |
Statutes amended in order of appearance
| | 3 | | 225 ILCS 45/1 | from Ch. 111 1/2, par. 73.101 | | 4 | | 225 ILCS 45/1a-1 | | | 5 | | 225 ILCS 45/1b | from Ch. 111 1/2, par. 73.101b | | 6 | | 225 ILCS 45/2 | from Ch. 111 1/2, par. 73.102 | | 7 | | 225 ILCS 45/4a | | | 8 | | 815 ILCS 390/14 | from Ch. 21, par. 214 | | 9 | | 815 ILCS 390/15 | from Ch. 21, par. 215 |
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