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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
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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.
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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
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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
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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
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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
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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
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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
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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 it
14 had existed at the time of the original application for such
15 license, would have warranted the Comptroller in refusing the
16 issuance 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.
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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;
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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 or
16 delivery of personal property, merchandise or services in
17 connection with the final disposition of dead human
18 bodies and regulating use or disposition of funds paid on
19 said agreements and providing penalties for violation
20 thereof", approved July 14, 1955, as amended, including
21 but not limited to:
22 (1) memorials,
23 (2) markers,
24 (3) monuments, and
25 (4) foundations, and.
26 (5) outer burial containers.
27 (D) D. "Undeveloped interment, entombment or
28 inurnment interment spaces" 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 therefor therefore in a:
32 (1) lawn crypt,
33 (2) mausoleum,
34 (3) garden crypt,
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1 (4) columbarium, or
2 (5) cemetery section.
3 (E) E. "Cemetery services" means those services
4 customarily performed by a cemetery 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.
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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" means mean a 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
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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
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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 typeface substantially as
9 follows follow:
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.
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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
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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
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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
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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
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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
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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
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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
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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.)
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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.
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