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91_HB2081enr HB2081 Enrolled LRB9103838DJcd 1 AN ACT concerning funeral and cemetery services, amending 2 named Acts. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 2. The Illinois Funeral or Burial Funds Act is 6 amended by changing Sections 1 and 4a and adding Section 4b 7 as follows: 8 (225 ILCS 45/1) (from Ch. 111 1/2, par. 73.101) 9 Sec. 1. Payment under pre-need contract. Except as 10 otherwise provided in this Section, all sales proceeds paid 11 to any person, partnership, association or corporation with 12 respect to merchandise or services covered by this Act, upon 13 any agreement or contract, or any series or combination of 14 agreements or contracts, which has for a purpose the 15 furnishing or performance of funeral services, or the 16 furnishing or delivery of any personal property, merchandise, 17 or services of any nature in connection with the final 18 disposition of a dead human body, including, but not limited 19 to, outer burial containers, urns, combination casket-vault 20 units, caskets and clothing, for future use at a time 21 determinable by the death of the person or persons whose body 22 or bodies are to be so disposed of, shall be held to be trust 23 funds, and shall be placed in trust in accordance with 24 Sections 1b and 2, or shall be used to purchase life 25 insurance or annuities in accordance with Section 2a. The 26 person, partnership, association or corporation receiving 27 said payments under a pre-need contract is hereby declared to 28 be a trustee thereof until deposits of funds are made in 29 accordance with Section 1b or 2a of this Act. Persons 30 holding less than $500,000 in trust funds may continue to act 31 as the trustee after the funds are deposited in accordance HB2081 Enrolled -2- LRB9103838DJcd 1 with subsection (d) of Section 1b. 2 Nothing in this Act shall be construed to prohibit the 3 inclusion of outer burial containers in sales contracts under 4 the Illinois Pre-Need Cemetery Sales Act. 5 (Source: P.A. 88-477.) 6 (225 ILCS 45/4a) 7 Sec. 4a. Investment of funds. 8 (a) A trustee shall, with respect to the investment of 9 trust funds, exercise the judgment and care under the 10 circumstances then prevailing that persons of prudence, 11 discretion, and intelligence exercise in the management of 12 their own affairs, not in regard to speculation, but in 13 regard to the permanent disposition of their funds, 14 considering the probable income as well as the probable 15 safety of their capital. 16 (b) The trust shall be a single-purpose trust fund. In 17 the event of the seller's bankruptcy, insolvency or 18 assignment for the benefit of creditors, or an adverse 19 judgment, the trust funds shall not be available to any 20 creditor as assets of the seller or to pay any expenses of 21 any bankruptcy or similar proceeding, but shall be 22 distributed to the purchasers or managed for their benefit by 23 the trustee holding the funds. Except in an action by the 24 Comptroller to revoke a license issued pursuant to this Act 25 and for creation of a receivership as provided in this Act, 26 the trust shall not be subject to judgment, execution, 27 garnishment, attachment, or other seizure by process in 28 bankruptcy or otherwise, nor to sale, pledge, mortgage, or 29 other alienation, and shall not be assignable except as 30 approved by the Comptroller. The changes made by this 31 amendatory Act of the 91st General Assembly are intended to 32 clarify existing law regarding the inability of licensees to 33 pledge the trust. HB2081 Enrolled -3- LRB9103838DJcd 1 (c) Because it is not known at the time of deposit or at 2 the time that income is earned on the trust account to whom 3 the principal and the accumulated earnings will be 4 distributed for the purpose of determining the Illinois 5 income tax due on these trust funds, the principal and any 6 accrued earnings or losses related to each individual account 7 shall be held in suspense until the final determination is 8 made as to whom the account shall be paid. The beneficiary's 9 estate shall not be responsible for any funeral and burial 10 purchases listed in a pre-need contract if the pre-need 11 contract is entered into on a guaranteed price basis. 12 If a pre-need contract is not a guaranteed price 13 contract, then to the extent the proceeds of a non-guaranteed 14 price pre-need contract cover the funeral and burial expenses 15 for the beneficiary, no claim may be made against the estate 16 of the beneficiary. A claim may be made against the 17 beneficiary's estate if the charges for the funeral services 18 and merchandise at the time of use exceed the amount of the 19 amount in trust plus the percentage of the sale proceeds 20 initially retained by the seller or the face value of the 21 life insurance policy or tax-deferred annuity. 22 (d) Trust funds shall not be invested by the trustee in 23 life insurance policies or tax-deferred annuities unless the 24 following requirements are met: 25 (1) The company issuing the life insurance policies 26 or tax-deferred annuities is licensed by the Illinois 27 Department of Insurance and the insurance producer or 28 annuity seller is licensed to do business in the State of 29 Illinois; 30 (2) Prior to the investment, the purchaser 31 approves, in writing, the investment in life insurance 32 policies or tax-deferred annuities; 33 (3) Prior to the investment, the purchaser is 34 notified by the seller in writing about the disclosures HB2081 Enrolled -4- LRB9103838DJcd 1 required for all pre-need contracts under Section 1a-1 of 2 this Act, and the purchase of life insurance or a 3 tax-deferred annuity is subject to the requirements of 4 Section 2a of this Act; 5 (4) Prior to the investment, the trustee informs 6 the Comptroller that trust funds shall be removed from 7 the trust account to purchase life insurance or a 8 tax-deferred annuity upon the written consent of the 9 purchaser; 10 (5) The purchaser retains the right to refund 11 provided for in this Act, unless the pre-need contract is 12 sold on an irrevocable basis as provided in Section 4 of 13 this Act; and 14 (6) Notice must be given in writing that the cash 15 surrender value of a life insurance policy may be less 16 than the amount provided for by the refund provisions of 17 the trust account. 18 (Source: P.A. 88-477.) 19 (225 ILCS 45/4b new) 20 Sec. 4b. Licensee bankruptcy. In the event of a 21 licensee's bankruptcy, insolvency, or assignment for the 22 benefit of creditors, or in the event of the bankruptcy, 23 insolvency, or assignment for the benefit of creditors of any 24 person, partnership, association, corporation, or other 25 entity that possesses a controlling interest in a licensee, 26 the licensee shall provide notice in writing of that event to 27 each purchaser of a pre-need sales contract or a pre-need 28 contract within 30 days after the event of bankruptcy, 29 insolvency, or assignment for the benefit of creditors. At a 30 minimum, the notice must contain the following: 31 (1) The name and address of the licensee. 32 (2) If different from the licensee, the name and 33 address of the party that is the subject of the HB2081 Enrolled -5- LRB9103838DJcd 1 bankruptcy, insolvency, or assignment for the benefit of 2 creditors. 3 (3) A brief description of the event of bankruptcy, 4 insolvency, or assignment for the benefit of creditors. 5 (4) The case name or other identifying title of any 6 matter pending in any court, federal or State, pertaining 7 to the bankruptcy, insolvency, or assignment for the 8 benefit of creditors. 9 (5) The name and address of the court in which the 10 bankruptcy, insolvency, or assignment for the benefit of 11 creditors is pending. 12 (6) A description of any action the purchaser must 13 undertake to file a claim or to protect the purchaser's 14 interests, including the purchaser's right to a refund 15 under this Act. 16 Section 5. The Cemetery Care Act is amended by changing 17 Sections 4 and 15 as follows: 18 (760 ILCS 100/4) (from Ch. 21, par. 64.4) 19 Sec. 4. Care funds; deposits; investments. Whenever a 20 cemetery authority owning, operating, controlling or managing 21 a privately operated cemetery accepts care funds, either in 22 connection with the sale or giving away at an imputed value 23 of an interment right, entombment right or inurnment right, 24 or in pursuance of a contract, or whenever, as a condition 25 precedent to the purchase or acceptance of an interment 26 right, entombment right or inurnment right, such cemetery 27 authority requires the establishment of a care fund or a 28 deposit in an already existing care fund, then such cemetery 29 authority shall execute and deliver to the person from whom 30 received an instrument in writing which shall specifically 31 state: (a) the nature and extent of the care to be furnished, 32 and (b) that such care shall be furnished only in so far as HB2081 Enrolled -6- LRB9103838DJcd 1 the net income derived from the amount deposited in trust 2 will permit (the income from the amount so deposited, less 3 necessary expenditures of administering the trust, shall be 4 deemed the net income), and (c) that not less than the 5 following amounts will be set aside and deposited in trust: 6 1. For interment rights, $1 per square foot of the 7 space sold or 15% of the sales price or imputed value, 8 whichever is the greater, with a minimum of $25 for each 9 individual interment right. 10 2. For entombment rights, not less than 10% of the 11 sales price or imputed value with a minimum of $25 for 12 each individual entombment right. 13 3. For inurnment rights, not less than 10% of the 14 sales price or imputed value with a minimum of $15 for 15 each individual inurnment right. 16 4. For any transfer of interment rights, entombment 17 rights, or inurnment rights recorded in the records of 18 the cemetery authority, excepting only transfers between 19 members of the immediate family of the transferor, a 20 minimum of $25 for each such right transferred. For the 21 purposes of this paragraph "immediate family of the 22 transferor" means the spouse, parents, grandparents, 23 children, grandchildren, and siblings of the transferor. 24 5. Upon an interment, entombment, or inurnment in a 25 grave, crypt, or niche in which rights of interment, 26 entombment, or inurnment were originally acquired from a 27 cemetery authority prior to January 1, 1948, a minimum of 28 $25 for each such right exercised. 29 6. For the special care of any lot, grave, crypt, 30 or niche or of a family mausoleum, memorial, marker, or 31 monument, the full amount received. 32 Such setting aside and deposit shall be made by such 33 cemetery authority not later than 30 days after the close of 34 the month in which the cemetery authority gave away for an HB2081 Enrolled -7- LRB9103838DJcd 1 imputed value or received the final payment on the purchase 2 price of interment rights, entombment rights, or inurnment 3 rights, or received the final payment for the general or 4 special care of a lot, grave, crypt or niche or of a family 5 mausoleum, memorial, marker or monument; and such amounts 6 shall be held by the trustee of the care funds of such 7 cemetery authority in trust in perpetuity for the specific 8 purposes stated in said written instrument. For all care 9 funds received by a cemetery authority, except for care funds 10 received by a cemetery authority pursuant to a specific gift, 11 grant, contribution, payment, legacy, or contract that are 12 subject to investment restrictions more restrictive than the 13 investment provisions set forth in this Act, and except for 14 care funds otherwise subject to a trust agreement executed by 15 a person or persons responsible for transferring the specific 16 gift, grant, contribution, payment, or legacy to the cemetery 17 authority that contains investment restrictions more 18 restrictive than the investment provisions set forth in this 19 Act, the cemetery authority may, without the necessity of 20 having to obtain prior approval from any court in this State, 21 designate a new trustee in accordance with this Act and 22 invest the care funds in accordance with this Section, 23 notwithstanding any contrary limitation contained in the 24 trust agreement. 25 Any such cemetery authority engaged in selling or giving 26 away at an imputed value interment rights, entombment rights 27 or inurnment rights, in conjunction with the selling or 28 giving away at an imputed value any other merchandise or 29 services not covered by this Act, shall be prohibited from 30 increasing the sales price or imputed value of those items 31 not requiring a care fund deposit under this Act with the 32 purpose of allocating a lesser sales price or imputed value 33 to items that require a care fund deposit. 34 In the event any sale that would require a deposit to HB2081 Enrolled -8- LRB9103838DJcd 1 such cemetery authority's care fund is made by a cemetery 2 authority on an installment basis, and the installment 3 contract is factored, discounted, or sold to a third party, 4 the cemetery authority shall deposit the amount due to the 5 care fund within 30 days after the close of the month in 6 which the installment contract was factored, discounted, or 7 sold. If, subsequent to such deposit, the purchaser defaults 8 on the contract such that no care fund deposit on that 9 contract would have been required, the cemetery authority may 10 apply the amount deposited as a credit against future 11 required deposits. 12 The trust authorized by this Section shall be a single 13 purpose trust fund. In the event of the seller's bankruptcy, 14 insolvency, or assignment for the benefit of creditors, or an 15 adverse judgment, the trust funds shall not be available to 16 any creditor as assets of the cemetery authority or to pay 17 any expenses of any bankruptcy or similar proceeding, but 18 shall be retained intact to provide for the future 19 maintenance of the cemetery. Except in an action by the 20 Comptroller to revoke a license issued pursuant to this Act 21 and for creation of a receivership as provided in this Act, 22 the trust shall not be subject to judgment, execution, 23 garnishment, attachment, or other seizure by process in 24 bankruptcy or otherwise, nor to sale, pledge, mortgage, or 25 other alienation, and shall not be assignable except as 26 approved by the Comptroller. The changes made by this 27 amendatory Act of the 91st General Assembly are intended to 28 clarify existing law regarding the inability of licensees to 29 pledge the trust. 30 (Source: P.A. 88-477; 89-615, eff. 8-9-96.) 31 (760 ILCS 100/15) (from Ch. 21, par. 64.15) 32 Sec. 15. The Comptroller may, upon 10 days' notice to 33 the licensee, by United States mail directed to the licensee HB2081 Enrolled -9- LRB9103838DJcd 1 at the address set forth in the license, stating the 2 contemplated action and, in general, the grounds therefor, 3 and upon reasonable opportunity to be heard prior to such 4 action, revoke any license issued hereunder if he finds that: 5 (a) The licensee has failed to make the annual report or 6 to maintain in effect the required bond or to comply with an 7 order, decision, or finding of the Comptroller made pursuant 8 to this Act; or that 9 (b) The licensee has violated any provision of this Act 10 or any regulation or direction made by the Comptroller under 11 this Act; or that 12 (c) Any fact or condition exists which would constitute 13 grounds for denying an application for a new license, if it14had existed at the time of the original application for such15license, would have warranted the Comptroller in refusing the16issuance of the license. 17 (Source: P.A. 78-592.) 18 Section 10. The Illinois Pre-Need Cemetery Sales Act is 19 amended by changing Sections 4, 14, 15, 16, and 20 and adding 20 16.5 as follows: 21 (815 ILCS 390/4) (from Ch. 21, par. 204) 22 Sec. 4. Definitions. As used in this Act, the following 23 terms shall have the meaning specified: 24 (a) "Pre-need sales contract" or "Pre-need sales" means 25 any agreement or contract or series or combination of 26 agreements or contracts which have for a purpose the sale of 27 cemetery merchandise, cemetery services or undeveloped 28 interment, entombment or inurnment spaces where the terms of 29 such sale require payment or payments to be made at a 30 currently determinable time and where the merchandise, 31 services or completed spaces are to be provided more than 120 32 days following the initial payment on the account. HB2081 Enrolled -10- LRB9103838DJcd 1 (b) "Delivery" occurs when: 2 (1) physical possession of the merchandise is 3 transferred or the easement for burial rights in a 4 completed space is executed, delivered and transferred to 5 the buyer; or 6 (2) title to the merchandise has been transferred 7 to the buyer and the merchandise has been paid for and is 8 in the possession of the seller who has placed it, until 9 needed, at the site of its ultimate use; or 10 (3) (A)A.the merchandise has been permanently 11 identified with the name of the buyer or the beneficiary 12 and delivered to a licensed and bonded warehouse and both 13 title to the merchandise and a warehouse receipt have 14 been delivered to the purchaser or beneficiary; except 15 that in the case of outer burial containers, the use of a 16 licensed and bonded warehouse as set forth in this 17 paragraph shall not constitute delivery for purposes of 18 this Act. Nothing herein shall prevent a seller from 19 perfecting a security interest in accordance with the 20 Uniform Commercial Code on any merchandise covered under 21 this Act. 22 (B)B.All warehouse facilities to which sellers 23 deliver merchandise pursuant to this Act shall: 24 (i) be either located in the State of Illinois 25 or qualify as a foreign warehouse facility as 26 defined herein; 27 (ii) submit to the Comptroller not less than 28 annually, by March 1 of each year, a report of all 29 cemetery merchandise stored by each licensee under 30 this Act which is in storage on the date of the 31 report; 32 (iii) permit the Comptroller or his designee 33 at any time to examine stored merchandise and to 34 examine any documents pertaining thereto; HB2081 Enrolled -11- LRB9103838DJcd 1 (iv) submit evidence satisfactory to the 2 Comptroller that all merchandise stored by said 3 warehouse for licensees under this Act is insured 4 for casualty or other loss normally assumed by a 5 bailee for hire; 6 (v) demonstrate to the Comptroller that the 7 warehouse has procured and is maintaining a 8 performance bond in the form, content and amount 9 sufficient to unconditionally guarantee to the 10 purchaser or beneficiary the prompt shipment of the 11 cemetery merchandise. 12 (C)C."Cemetery merchandise" means items of 13 personal property normally sold by a cemetery authority 14 not covered under the Illinois Funeral or Burial Funds 15 Act"An Act concerning agreements for furnishing or16delivery of personal property, merchandise or services in17connection with the final disposition of dead human18bodies and regulating use or disposition of funds paid on19said agreements and providing penalties for violation20thereof", approved July 14, 1955, as amended, including 21 but not limited to: 22 (1) memorials, 23 (2) markers, 24 (3) monuments,and25 (4) foundations, and.26 (5) outer burial containers. 27 (D)D."Undeveloped interment, entombment or 28 inurnmentintermentspaces" or "undeveloped spaces" means 29 any space to be used for the reception of human remains 30 that is not completely and totally constructed at the 31 time of initial payment thereforthereforein a: 32 (1) lawn crypt, 33 (2) mausoleum, 34 (3) garden crypt, HB2081 Enrolled -12- LRB9103838DJcd 1 (4) columbarium, or 2 (5) cemetery section. 3 (E)E."Cemetery services" means those services 4 customarily performed byacemetery or crematory 5 personnel in connection with the interment, entombment, 6 inurnment or cremation of a dead human body. 7 (F)F."Cemetery section" means a grouping of 8 spaces intended to be developed simultaneously for the 9 purpose of interring human remains. 10 (G)G."Columbarium" means an arrangement of niches 11 that may be an entire building, a complete room, a series 12 of special indoor alcoves, a bank along a corridor or 13 part of an outdoor garden setting that is constructed of 14 permanent material such as bronze, marble, brick, stone 15 or concrete for the inurnment of human remains. 16 (H)H."Lawn crypt" means a permanent underground 17 crypt usually constructed of reinforced concrete or 18 similar material installed in multiple units for the 19 interment of human remains. 20 (I)I."Mausoleum" or "garden crypt" means a 21 grouping of spaces constructed of reinforced concrete or 22 similar material constructed or assembled above the 23 ground for entombing human remains. 24 (J)J."Memorials, markers and monuments" means the 25 object usually comprised of a permanent material such as 26 granite or bronze used to identify and memorialize the 27 deceased. 28 (K)K."Foundations" means those items used to 29 affix or support a memorial or monument to the ground in 30 connection with the installation of a memorial, marker or 31 monument. 32 (L)L."Person" means an individual, corporation, 33 partnership, joint venture, business trust, voluntary 34 organization or any other form of entity. HB2081 Enrolled -13- LRB9103838DJcd 1 (M)M."Seller" means any person selling or 2 offering for sale cemetery merchandise, cemetery services 3 or undeveloped spaces on a pre-need basis. 4 (N)N."Religious cemetery" meansmeana cemetery 5 owned, operated, controlled or managed by any recognized 6 church, religious society, association or denomination or 7 by any cemetery authority or any corporation 8 administering, or through which is administered, the 9 temporalities of any recognized church, religious 10 society, association or denomination. 11 (O)O."Municipal cemetery" means a cemetery owned, 12 operated, controlled or managed by any city, village, 13 incorporated town, township, county or other municipal 14 corporation, political subdivision, or instrumentality 15 thereof authorized by law to own, operate or manage a 16 cemetery. 17 (O-1) "Outer burial container" means a container 18 made of concrete, steel, wood, fiberglass, or similar 19 material, used solely at the interment site, and designed 20 and used exclusively to surround or enclose a separate 21 casket and to support the earth above such casket, 22 commonly known as a burial vault, grave box, or grave 23 liner, but not including a lawn crypt. 24 (P)P."Sales price" means the gross amount paid by 25 a purchaser on a pre-need sales contract for cemetery 26 merchandise, cemetery services or undeveloped interment, 27 entombment or inurnment spaces, excluding sales taxes, 28 credit life insurance premiums, finance charges and 29"Cemetery Care Act"contributions. 30 (Q)Q."Foreign warehouse facility" means a 31 warehouse facility now or hereafter located in any state 32 or territory of the United States, including the District 33 of Columbia, other than the State of Illinois. 34 A foreign warehouse facility shall be deemed to have HB2081 Enrolled -14- LRB9103838DJcd 1 appointed the Comptroller to be its true and lawful 2 attorney upon whom may be served all legal process in any 3 action or proceeding against it relating to or growing 4 out of this Act, and the acceptance of the delivery of 5 stored merchandise under this Act shall be signification 6 of its agreement that any such process against it which 7 is so served, shall be of the same legal force and 8 validity as though served upon it personally. 9 Service of such process shall be made by delivering 10 to and leaving with the Comptroller, or any agent having 11 charge of the Comptroller's Department of Cemetery and 12 Burial Trusts, a copy of such process and such service 13 shall be sufficient service upon such foreign warehouse 14 facility if notice of such service and a copy of the 15 process are, within 10 days thereafter, sent by 16 registered mail by the plaintiff to the foreign warehouse 17 facility at its principal office and the plaintiff's 18 affidavit of compliance herewith is appended to the 19 summons. The Comptroller shall keep a record of all 20 process served upon him under this Section and shall 21 record therein the time of such service. 22 (Source: P.A. 85-1209; revised 10-31-98.) 23 (815 ILCS 390/14) (from Ch. 21, par. 214) 24 Sec. 14. Contract required. 25 (a) It is unlawful for any seller doing business within 26 this State to accept sales proceeds, either directly or 27 indirectly by any means, unless the seller enters into a 28 pre-need sales contract with the purchaser which meets the 29 following requirements: 30 (1) A written sales contract shall be executed in 31 duplicate for each pre-need sale made by a licensee, and 32 a signed copy given to the purchaser. Each completed 33 contract shall be numbered and shall contain the name and HB2081 Enrolled -15- LRB9103838DJcd 1 address of the purchaser and the seller, the name of the 2 person, if known, who is to receive the cemetery 3 merchandise, cemetery services or the completed 4 interment, entombment or inurnment spaces under the 5 contract and specifically identify such merchandise, 6 services or spaces. 7 (2) In addition, such contracts must contain a 8 provision in distinguishing typefacesubstantiallyas 9 followsfollow: 10 "Notwithstanding anything in this contract to the 11 contrary, you are afforded certain specific rights of 12 cancellation and refund under Sections 18 and 19 of the 13 Illinois Pre-Need Cemetery Sales Act, enacted by the 84th 14 General Assembly of the State of Illinois". 15 (3) All pre-need sales contracts shall be sold on a 16 guaranteed price basis. At the time of performance of the 17 service or delivery of the merchandise, the seller shall 18 be prohibited from assessing the purchaser or his heirs 19 or assigns or duly authorized representative any 20 additional charges for the specific merchandise and 21 services listed on the pre-need sales contract. 22 Each contract shall clearly disclose that the price of 23 the merchandise or services is guaranteed and shall contain 24 the following statement in 12 point bold type: 25 "THIS CONTRACT GUARANTEES THE BENEFICIARY THE SPECIFIC 26 GOODS AND SERVICES CONTRACTED FOR. NO ADDITIONAL CHARGES 27 MAY BE REQUIRED. FOR DESIGNATED GOODS AND SERVICES, 28 ADDITIONAL CHARGES MAY BE INCURRED FOR UNEXPECTED EXPENSES." 29 (b) Every pre-need sales contract must be in writing, 30 and no pre-need sales contract form may be used unless it has 31 previously been filed with the Comptroller. The Comptroller 32 shall review all pre-need sales contract forms and, upon 33 written notification to the seller, shall prohibit the use of 34 contract forms that do not meet the requirements of this Act. HB2081 Enrolled -16- LRB9103838DJcd 1 Any use or attempted use of any oral pre-need sales contract 2 or any written pre-need sales contract in a form not filed 3 with the Comptroller or in a form that does not meet the 4 requirements of this Act shall be deemed a violation of this 5 Act. The Comptroller may by rule develop a model pre-need 6 sales contract form that meets the requirements of this Act. 7 (c) To the extent the Rule is applicable, every pre-need 8 sales contract is subject to the Federal Trade Commission 9 Rule concerning the Cooling-Off Period for Door-to-Door Sales 10 (16 CFR Part 429). 11 (Source: P.A. 85-805.) 12 (815 ILCS 390/15) (from Ch. 21, par. 215) 13 Sec. 15. (a) Whenever a seller receives anything of 14 value under a pre-need sales contract, the person receiving 15 such value shall deposit 50% of all proceeds received into 16 one or more trust funds maintained pursuant to this Section, 17 except that, in the case of proceeds received for the 18 purchase of outer burial containers, 85% of the proceeds 19 shall be deposited into one or more trust funds. Such 20 deposits shall be made until the amount deposited in trust 21 equals 50% of the sales price of the cemetery merchandise, 22 cemetery services and undeveloped spaces included in such 23 contract, except that, in the case of deposits for outer 24 burial containers, deposits shall be made until the amount 25 deposited in trust equals 85% of the sales price. In the 26 event an installment contract is factored, discounted or sold 27 to a third party, the seller shall deposit an amount equal to 28 50% of the sales price of the installment contract, except 29 that, for the portion of the contract attributable to the 30 sale of outer burial containers, the seller shall deposit an 31 amount equal to 85% of the sales price. Proceeds required to 32 be deposited in trust which are attributable to cemetery 33 merchandise and cemetery services shall be held in a 34 "Cemetery Merchandise Trust Fund". Proceeds required to be HB2081 Enrolled -17- LRB9103838DJcd 1 deposited in trust which are attributable to the sale of 2 undeveloped interment, entombment or inurnment spaces shall 3 be held in a "Pre-construction Trust Fund". If merchandise is 4 delivered for storage in a bonded warehouse, as authorized 5 herein, and payment of transportation or other charges 6 totaling more than $20 will be required in order to secure 7 delivery to the site of ultimate use, upon such delivery to 8 the warehouse the seller shall deposit to the trust fund the 9 full amount of the actual or estimated transportation charge. 10 Transportation charges which have been prepaid by the seller 11 shall not be deposited to trust funds maintained pursuant to 12 this Section. As used in this Section, "all proceeds" means 13 the entire amount paid by a purchaser in connection with a 14 pre-need sales contract, including finance charges and 15 Cemetery Care Act contributions, but excluding sales taxes 16 and credit life insurance premiums. 17 (b) All trust deposits required by this Act shall be 18 made within 30 days following the end of the month of 19 receipt. 20 (c) A trust established under this Act must be 21 maintained: 22 (1) in a trust account established in a bank, savings 23 and loan association or credit union authorized to do 24 business in Illinois where such accounts are insured by an 25 agency of the federal government; 26 (2) in a trust company authorized to do business in 27 Illinois; or 28 (3) in an investment company authorized to do business 29 in Illinois insured by the Securities Brokers Insurance 30 Corporation. 31 (d) Funds deposited in the trust account shall be 32 identified in the records of the seller by the name of the 33 purchaser. Nothing shall prevent the trustee from commingling 34 the deposits in any such trust fund for purposes of the HB2081 Enrolled -18- LRB9103838DJcd 1 management thereof and the investment of funds therein as 2 provided in the "Common Trust Fund Act", approved June 24, 3 1949, as amended. In addition, multiple trust funds 4 maintained pursuant to this Act may be commingled or 5 commingled with other funeral or burial related trust funds, 6 provided that all record keeping requirements imposed by or 7 pursuant to law are met. 8 (e) In lieu of a pre-construction trust fund, a seller 9 of undeveloped interment, entombment or inurnment spaces may 10 obtain and file with the Comptroller a performance bond in an 11 amount at least equal to 50% of the sales price of the 12 undeveloped spaces or the estimated cost of completing 13 construction, whichever is greater. The bond shall be 14 conditioned on the satisfactory construction and completion 15 of the undeveloped spaces as required in Section 19 of this 16 Act. 17 Each bond obtained under this Section shall have as 18 surety thereon a corporate surety company incorporated under 19 the laws of the United States, or a State, the District of 20 Columbia or a territory or possession of the United States. 21 Each such corporate surety company must be authorized to 22 provide performance bonds as required by this Section, have 23 paid-up capital of at least $250,000 in cash or its 24 equivalent and be able to carry out its contracts. Each 25 pre-need seller must provide to the Comptroller, for each 26 corporate surety company such seller utilizes, a statement of 27 assets and liabilities of the corporate surety company sworn 28 to by the president and secretary of the corporation by 29 January 1 of each year. 30 The Comptroller shall prohibit pre-need sellers from 31 doing new business with a corporate surety company if the 32 company is insolvent or is in violation of this Section. In 33 addition the Comptroller may direct a pre-need seller to 34 reinstate a pre-construction trust fund upon the HB2081 Enrolled -19- LRB9103838DJcd 1 Comptroller's determination that the corporate surety company 2 no longer is sufficient security. 3 All performance bonds issued pursuant to this Section 4 must be irrevocable during the statutory term for completing 5 construction specified in Section 19 of this Act, unless 6 terminated sooner by the completion of construction. 7 (f) Whenever any pre-need contract shall be entered into 8 and include 1) items of cemetery merchandise and cemetery 9 services, and 2) rights to interment, inurnment or entombment 10 in completed spaces without allocation of the gross sale 11 price among the items sold, the application of payments 12 received under the contract shall be allocated, first to the 13 right to interment, inurnment or entombment, second to items 14 of cemetery merchandise and cemetery services, unless some 15 other allocation is clearly provided in the contract. 16 (g) Any person engaging in pre-need sales who enters 17 into a combination sale which involves the sale of items 18 covered by a trust or performance bond requirement and any 19 item not covered by any entrustment or bond requirement, 20 shall be prohibited from increasing the gross sales price of 21 those items not requiring entrustment with the purpose of 22 allocating a lesser gross sales price to items which require 23 a trust deposit or a performance bond. 24 (Source: P.A. 85-1209.) 25 (815 ILCS 390/16) (from Ch. 21, par. 216) 26 Sec. 16. Trust funds; disbursements. 27 (a) A trustee shall make no disbursements from the trust 28 fund except as provided in this Act. 29 (b) A trustee shall, with respect to the investment of 30 such trust funds, exercise the judgment and care under the 31 circumstances then prevailing which persons of prudence, 32 discretion and intelligence exercise in the management of 33 their own affairs, not in regard to speculation, but in HB2081 Enrolled -20- LRB9103838DJcd 1 regard to the permanent disposition of their funds, 2 considering the probable income as well as the probable 3 safety of their capital. 4 The seller shall act as trustee of all amounts received 5 for cemetery merchandise, services, or undeveloped spaces 6 until those amounts have been deposited into the trust fund. 7 The seller may continue to be the trustee of up to $500,000 8 that has been deposited into the trust fund, but the seller 9 must retain an independent trustee for any amount of trust 10 funds in excess of $500,000. A seller holding trust funds in 11 excess of $500,000 on the effective date of this amendatory 12 Act of 1996 shall have 36 months to retain an independent 13 trustee for the amounts over $500,000; any other seller must 14 retain an independent trustee for its trust funds in excess 15 of $500,000 as soon as may be practical. The Comptroller 16 shall have the right to disqualify the trustee upon the same 17 grounds as for refusing to grant or revoking a license 18 hereunder. Upon notice to the Comptroller, the seller may 19 change the trustee of the trust fund. 20 (c) The trustee may rely upon certifications and 21 affidavits made to it under the provisions of this Act, and 22 shall not be liable to any person for such reliance. 23 (d) A trustee shall be allowed to withdraw from the 24 trust funds maintained pursuant to this Act, payable solely 25 from the income earned on such trust funds, a reasonable fee 26 for all usual and customary services for the operation of the 27 trust fund, including, but not limited to trustee fees, 28 investment advisor fees, allocation fees, annual audit fees 29 and other similar fees. The maximum amount allowed to be 30 withdrawn for these fees each year shall be the lesser of 3% 31 of the balance of the trust calculated on an annual basis or 32 the amount of annual income generated therefrom. 33 (e) The trust shall be a single-purpose trust fund. In 34 the event of the seller's bankruptcy, insolvency or HB2081 Enrolled -21- LRB9103838DJcd 1 assignment for the benefit of creditors, or an adverse 2 judgment, the trust funds shall not be available to any 3 creditor as assets of the seller or to pay any expenses of 4 any bankruptcy or similar proceeding, but shall be 5 distributed to the purchasers or managed for their benefit by 6 the trustee holding the funds. Except in an action by the 7 Comptroller to revoke a license issued pursuant to this Act 8 and for creation of a receivership as provided in this Act, 9 the trust shall not be subject to judgment, execution, 10 garnishment, attachment, or other seizure by process in 11 bankruptcy or otherwise, nor to sale, pledge, mortgage, or 12 other alienation, and shall not be assignable except as 13 approved by the Comptroller. The changes made by this 14 amendatory Act of the 91st General Assembly are intended to 15 clarify existing law regarding the inability of licensees to 16 pledge the trust. 17 (f) Because it is not known at the time of deposit or at 18 the time that income is earned on the trust account to whom 19 the principal and the accumulated earnings will be 20 distributed, for purposes of determining the Illinois Income 21 Tax due on these trust funds, the principal and any accrued 22 earnings or losses relating to each individual account shall 23 be held in suspense until the final determination is made as 24 to whom the account shall be paid. 25 (Source: P.A. 88-477; 89-615, eff. 8-9-96.) 26 (815 ILCS 390/16.5 new) 27 Sec. 16.5. Licensee bankruptcy. In the event of a 28 licensee's bankruptcy, insolvency, or assignment for the 29 benefit of creditors, or in the event of the bankruptcy, 30 insolvency, or assignment for the benefit of creditors of any 31 person, partnership, association, corporation, or other 32 entity that possesses a controlling interest in a licensee, 33 the licensee shall provide notice in writing of that event to HB2081 Enrolled -22- LRB9103838DJcd 1 each purchaser of a pre-need sales contract or a pre-need 2 contract within 30 days after the event of bankruptcy, 3 insolvency, or assignment for the benefit of creditors. At a 4 minimum, the notice must contain the following: 5 (1) The name and address of the licensee. 6 (2) If different from the licensee, the name and 7 address of the party that is the subject of the 8 bankruptcy, insolvency, or assignment for the benefit of 9 creditors. 10 (3) A brief description of the event of bankruptcy, 11 insolvency, or assignment for the benefit of creditors. 12 (4) The case name or other identifying title of any 13 matter pending in any court, federal or State, pertaining 14 to the bankruptcy, insolvency, or assignment for the 15 benefit of creditors. 16 (5) The name and address of the court in which the 17 bankruptcy, insolvency, or assignment for the benefit of 18 creditors is pending. 19 (6) A description of any action the purchaser must 20 undertake to file a claim or to protect the purchaser's 21 interests, including the purchaser's right to a refund 22 under this Act. 23 (815 ILCS 390/20) (from Ch. 21, par. 220) 24 Sec. 20. (a) Each licensee must keep accurate accounts, 25 books and records in this State of all transactions, copies 26 of agreements, dates and amounts of payments made or 27 received, the names and addresses of the contracting parties, 28 the names and addresses of persons for whose benefit funds 29 are received, if known, and the names of the trust 30 depositories. 31 (b) Each licensee must maintain such records for a 32 period of 3 years after the licensee shall have fulfilled his 33 obligation under the pre-need contract or 3 years after any HB2081 Enrolled -23- LRB9103838DJcd 1 stored merchandise shall have been provided to the purchaser 2 or beneficiary, whichever is later. 3 (c) Each licensee shall submit reports to the 4 Comptroller annually, under oath, on forms furnished by the 5 Comptroller. The annual report shall contain, but shall not 6 be limited to, the following: 7 (1) An accounting of the principal deposit and 8 additions of principal during the fiscal year. 9 (2) An accounting of any withdrawal of principal or 10 earnings. 11 (3) An accounting at the end of each fiscal year, 12 of the total amount of principal and earnings held. 13 (d) The annual report shall be filed by the licensee 14 with the Comptroller within 75 days after the end of the 15 licensee's fiscal year. An extension of up to 60 days may be 16 granted by the Comptroller, upon a showing of need by the 17 licensee. Any other reports shall be in the form furnished 18 or specified by the Comptroller. If a licensee fails to 19 submit an annual report to the Comptroller within the time 20 specified in this Section, the Comptroller shall impose upon 21 the licensee a penalty of $5 for each and every day the 22 licensee remains delinquent in submitting the annual report. 23 Each report shall be accompanied by a check or money order in 24 the amount of $10 payable to: Comptroller, State of 25 Illinois. 26 (e) On and after the effective date of this amendatory 27 Act of the 91st General Assembly, a licensee may report all 28 required information concerning the sale of outer burial 29 containers on the licensee's annual report required to be 30 filed under this Act and shall not be required to report that 31 information under the Illinois Funeral or Burial Funds Act, 32 as long as the information is reported under this Act. 33 (Source: P.A. 88-477.) HB2081 Enrolled -24- LRB9103838DJcd 1 Section 99. Effective date. This Act takes effect upon 2 becoming law, except that the changes to Section 1 of the 3 Funeral or Burial Funds Act and the changes to Sections 4, 4 14, 15, and 20 of the Pre-Need Cemetery Sales Act take effect 5 on January 1, 2000.