99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB4050

 

Introduced , by Rep. Dan Brady

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Illinois Funeral or Burial Funds Act. Limits certain provisions concerning payment under pre-need contracts to pre-need contracts entered into prior to the effective date of the amendatory Act. Makes changes to the definition of "seller". Provides that, before a seller and purchaser enter into a pre-need contract or pre-need sales contract, the seller must disclose and fully explain certain funding options. Provides that, if a pre-need contract includes the sale of funeral services and merchandise: (1) the seller must be a funeral director licensed under the Funeral Directors and Embalmers Licensing Code who is employed at the time of the sale of the contract by the funeral establishment through which the funeral services and merchandise will be provided, (2) the contract must be filled out by a funeral director licensed under the Funeral Directors and Embalmers Licensing Code, and (3) the contract may only be executed by a funeral director licensed under the Funeral Directors and Embalmers Licensing Code. Amends the Illinois Pre-Need Cemetery Sales Act. Provides that sellers of pre-need sales contracts must be licensed by the Department of Financial and Professional Regulation, and requires specified continuing education. Limits certain provisions concerning payment under pre-need contracts to pre-need contracts entered into prior to the effective date of the amendatory Act. Provides that, before a seller and purchaser enter into a pre-need contract or pre-need sales contract, the seller must disclose and fully explain certain funding options. Makes other changes. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB4050LRB099 11155 AMC 31635 b

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

 

 

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1with Section 2a. The person, partnership, association or
2corporation receiving said payments under a pre-need contract
3is hereby declared to be a trustee thereof until deposits of
4funds are made in accordance with Section 1b or 2a of this Act.
5    This Section applies only to pre-need contracts entered
6into prior to the effective date of this amendatory Act of the
799th General Assembly.
8    Nothing in this Act shall be construed to prohibit the
9inclusion of outer burial containers in sales contracts under
10the Illinois Pre-Need Cemetery Sales Act.
11(Source: P.A. 96-879, eff. 2-2-10.)
 
12    (225 ILCS 45/1a)  (from Ch. 111 1/2, par. 73.101a)
13    Sec. 1a. For the purposes of this Act, the following terms
14shall have the meanings specified, unless the context clearly
15requires another meaning:
16    "Beneficiary" means the person specified in the pre-need
17contract upon whose death funeral services or merchandise shall
18be provided or delivered.
19    "Licensee" means a seller of a pre-need contract who has
20been licensed by the Comptroller under this Act.
21    "Outer burial container" means any container made of
22concrete, steel, wood, fiberglass or similar material, used
23solely at the interment site, and designed and used exclusively
24to surround or enclose a separate casket and to support the
25earth above such casket, commonly known as a burial vault,

 

 

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1grave box or grave liner, but not including a lawn crypt as
2defined in the Illinois Pre-need Cemetery Sales Act.
3    "Parent company" means a corporation owning more than 12
4cemeteries or funeral homes in more than one state.
5    "Person" means any person, partnership, association,
6corporation, or other entity.
7    "Pre-need contract" means any agreement or contract, or any
8series or combination of agreements or contracts, whether
9funded by trust deposits or life insurance policies or
10annuities, which has for a purpose the furnishing or
11performance of funeral services or the furnishing or delivery
12of any personal property, merchandise, or services of any
13nature in connection with the final disposition of a dead human
14body. Nothing in this Act is intended to regulate the content
15of a life insurance policy or a tax-deferred annuity.
16    "Provider" means a person who is obligated for furnishing
17or performing funeral services or the furnishing or delivery of
18any personal property, merchandise, or services of any nature
19in connection with the final disposition of a dead human body.
20    "Purchaser" means the person who originally paid the money
21under or in connection with a pre-need contract.
22    "Sales proceeds" means the entire amount paid to a seller,
23exclusive of sales taxes paid by the seller, finance charges
24paid by the purchaser, and credit life, accident or disability
25insurance premiums, upon any agreement or contract, or series
26or combination of agreements or contracts, for the purpose of

 

 

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1performing funeral services or furnishing personal property,
2merchandise, or services of any nature in connection with the
3final disposition of a dead human body, including, but not
4limited to, the retail price paid for such services and
5personal property and merchandise.
6    "Purchase price" means sales proceeds less finance charges
7on retail installment contracts.
8    "Seller" means a the person, licensed as a funeral director
9or a funeral director and embalmer under the Funeral Directors
10and Embalmers Licensing Code, who sells or offers to sell the
11pre-need contract to a purchaser, whether funded by a trust
12agreement, life insurance policy, or tax-deferred annuity, or
13other means agreed to by the purchaser and seller in the
14pre-need contract.
15    "Trustee" means a person authorized to hold funds under
16this Act.
17(Source: P.A. 92-419, eff. 1-1-02.)
 
18    (225 ILCS 45/1c new)
19    Sec. 1c. Disclosures; contract requirements. Before a
20seller and purchaser enter into a pre-need contract for funeral
21services or merchandise, the seller must disclose and fully
22explain what financial plans are offered by the seller and the
23funeral establishment.
24    If a pre-need contract includes the sale of funeral
25services and merchandise: (1) the seller must be a funeral

 

 

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1director licensed under the Funeral Directors and Embalmers
2Licensing Code who is employed at the time of the sale of the
3contract by the funeral establishment through which the funeral
4services and merchandise will be provided, (2) the contract
5must be filled out by a funeral director licensed under the
6Funeral Directors and Embalmers Licensing Code, and (3) the
7contract may only be executed by a funeral director licensed
8under the Funeral Directors and Embalmers Licensing Code.
 
9    Section 10. The Illinois Pre-Need Cemetery Sales Act is
10amended by changing Sections 4, 15, and 17 and by adding
11Section 15.5 as follows:
 
12    (815 ILCS 390/4)  (from Ch. 21, par. 204)
13    Sec. 4. Definitions. As used in this Act, the following
14terms shall have the meaning specified:
15    (A) "Pre-need sales contract" or "Pre-need sales" means any
16agreement or contract or series or combination of agreements or
17contracts which have for a purpose the sale of cemetery
18merchandise, cemetery services or undeveloped interment,
19entombment or inurnment spaces where the terms of such sale
20require payment or payments to be made at a currently
21determinable time and where the merchandise, services or
22completed spaces are to be provided more than 120 days
23following the initial payment on the account. An agreement or
24contract for a memorial, marker, or monument shall not be

 

 

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1deemed a "pre-need sales contract" or a "pre-need sale" if the
2memorial, marker, or monument is delivered within 180 days
3following initial payment on the account and work thereon
4commences a reasonably short time after initial payment on the
5account.
6    (B) "Delivery" occurs when:
7        (1) Physical possession of the merchandise is
8    transferred or the easement for burial rights in a
9    completed space is executed, delivered and transferred to
10    the buyer; or
11        (2) Following authorization by a purchaser under a
12    pre-need sales contract, title to the merchandise has been
13    transferred to the buyer and the merchandise has been paid
14    for and is in the possession of the seller who has placed
15    it, until needed, at the site of its ultimate use; or
16        (3) Following authorization by a purchaser under a
17    pre-need sales contract, the merchandise has been
18    permanently identified with the name of the buyer or the
19    beneficiary and delivered to a licensed and bonded
20    warehouse and both title to the merchandise and a warehouse
21    receipt have been delivered to the purchaser or beneficiary
22    and a copy of the warehouse receipt has been delivered to
23    the licensee for retention in its files; except that in the
24    case of outer burial containers, the use of a licensed and
25    bonded warehouse as set forth in this paragraph shall not
26    constitute delivery for purposes of this Act. Nothing

 

 

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1    herein shall prevent a seller from perfecting a security
2    interest in accordance with the Uniform Commercial Code on
3    any merchandise covered under this Act.
4        All warehouse facilities to which sellers deliver
5    merchandise pursuant to this Act shall:
6            (i) be either located in the State of Illinois or
7        qualify as a foreign warehouse facility as defined
8        herein;
9            (ii) submit to the Comptroller not less than
10        annually, by March 1 of each year, a report of all
11        cemetery merchandise stored by each licensee under
12        this Act which is in storage on the date of the report;
13            (iii) permit the Comptroller or his designee at any
14        time to examine stored merchandise and to examine any
15        documents pertaining thereto;
16            (iv) submit evidence satisfactory to the
17        Comptroller that all merchandise stored by said
18        warehouse for licensees under this Act is insured for
19        casualty or other loss normally assumed by a bailee for
20        hire;
21            (v) demonstrate to the Comptroller that the
22        warehouse has procured and is maintaining a
23        performance bond in the form, content and amount
24        sufficient to unconditionally guarantee to the
25        purchaser or beneficiary the prompt shipment of the
26        cemetery merchandise.

 

 

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1    (C) "Cemetery merchandise" means items of personal
2property normally sold by a cemetery authority not covered
3under the Illinois Funeral or Burial Funds Act, including but
4not limited to:
5        (1) memorials,
6        (2) markers,
7        (3) monuments,
8        (4) foundations, and
9        (5) outer burial containers.
10    (D) "Undeveloped interment, entombment or inurnment
11spaces" or "undeveloped spaces" means any space to be used for
12the reception of human remains that is not completely and
13totally constructed at the time of initial payment therefor in
14a:
15        (1) lawn crypt,
16        (2) mausoleum,
17        (3) garden crypt,
18        (4) columbarium, or
19        (5) cemetery section.
20    (E) "Cemetery services" means those services customarily
21performed by cemetery or crematory personnel in connection with
22the interment, entombment, inurnment or cremation of a dead
23human body.
24    (F) "Cemetery section" means a grouping of spaces intended
25to be developed simultaneously for the purpose of interring
26human remains.

 

 

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1    (G) "Columbarium" means an arrangement of niches that may
2be an entire building, a complete room, a series of special
3indoor alcoves, a bank along a corridor or part of an outdoor
4garden setting that is constructed of permanent material such
5as bronze, marble, brick, stone or concrete for the inurnment
6of human remains.
7    (H) "Lawn crypt" means a permanent underground crypt
8usually constructed of reinforced concrete or similar material
9installed in multiple units for the entombment of human
10remains.
11    (I) "Mausoleum" or "garden crypt" means a grouping of
12spaces constructed of reinforced concrete or similar material
13constructed or assembled above the ground for entombing human
14remains.
15    (J) "Memorials, markers and monuments" means the object
16usually comprised of a permanent material such as granite or
17bronze used to identify and memorialize the deceased.
18    (K) "Foundations" means those items used to affix or
19support a memorial or monument to the ground in connection with
20the installation of a memorial, marker or monument.
21    (L) "Person" means an individual, corporation,
22partnership, joint venture, business trust, voluntary
23organization or any other form of entity.
24    (M) "Seller" means any person selling or offering for sale
25cemetery merchandise, cemetery services or undeveloped
26interment, entombment, or inurnment spaces in accordance with a

 

 

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1pre-need sales contract. The seller must be licensed in the
2State of Illinois by the Department of Financial and
3Professional Regulation and shall attend at least 24 hours of
4continuing education in every 2-year period. The continuing
5education shall be approved by the Department of Financial and
6Professional Regulation.
7    (N) "Religious cemetery" means a cemetery owned, operated,
8controlled or managed by any recognized church, religious
9society, association or denomination or by any cemetery
10authority or any corporation administering, or through which is
11administered, the temporalities of any recognized church,
12religious society, association or denomination.
13    (O) "Municipal cemetery" means a cemetery owned, operated,
14controlled or managed by any city, village, incorporated town,
15township, county or other municipal corporation, political
16subdivision, or instrumentality thereof authorized by law to
17own, operate or manage a cemetery. "Municipal cemetery" also
18includes a cemetery placed in receivership pursuant to this Act
19while such cemetery is in receivership.
20    (O-1) "Outer burial container" means a container made of
21concrete, steel, wood, fiberglass, or similar material, used
22solely at the interment site, and designed and used exclusively
23to surround or enclose a separate casket and to support the
24earth above such casket, commonly known as a burial vault,
25grave box, or grave liner, but not including a lawn crypt.
26    (P) "Sales price" means the gross amount paid by a

 

 

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1purchaser on a pre-need sales contract for cemetery
2merchandise, cemetery services or undeveloped interment,
3entombment or inurnment spaces, excluding sales taxes, credit
4life insurance premiums, finance charges and Cemetery Care Act
5contributions.
6    (Q) (Blank).
7    (R) "Provider" means a person who is responsible for
8performing cemetery services or furnishing cemetery
9merchandise, interment spaces, entombment spaces, or inurnment
10spaces under a pre-need sales contract.
11    (S) "Purchaser" or "buyer" means the person who originally
12paid the money under or in connection with a pre-need sales
13contract.
14    (T) "Parent company" means a corporation owning more than
1512 cemeteries or funeral homes in more than one state.
16    (U) "Foreign warehouse facility" means a warehouse
17facility now or hereafter located in any state or territory of
18the United States, including the District of Columbia, other
19than the State of Illinois.
20    A foreign warehouse facility shall be deemed to have
21appointed the Comptroller to be its true and lawful attorney
22upon whom may be served all legal process in any action or
23proceeding against it relating to or growing out of this Act,
24and the acceptance of the delivery of stored merchandise under
25this Act shall be signification of its agreement that any such
26process against it which is so served, shall be of the same

 

 

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1legal force and validity as though served upon it personally.
2    Service of such process shall be made by delivering to and
3leaving with the Comptroller, or any agent having charge of the
4Comptroller's Department of Cemetery and Burial Trusts, a copy
5of such process and such service shall be sufficient service
6upon such foreign warehouse facility if notice of such service
7and a copy of the process are, within 10 days thereafter, sent
8by registered mail by the plaintiff to the foreign warehouse
9facility at its principal office and the plaintiff's affidavit
10of compliance herewith is appended to the summons. The
11Comptroller shall keep a record of all process served upon him
12under this Section and shall record therein the time of such
13service.
14(Source: P.A. 96-879, eff. 2-2-10.)
 
15    (815 ILCS 390/15)  (from Ch. 21, par. 215)
16    Sec. 15. (a) Whenever a seller receives anything of value
17under a pre-need sales contract, the person receiving such
18value shall deposit 50% of all proceeds received into one or
19more trust funds maintained pursuant to this Section, except
20that, in the case of proceeds received for the purchase of
21outer burial containers, 85% of the proceeds shall be deposited
22into one or more trust funds. Such deposits shall be made until
23the amount deposited in trust equals 50% of the sales price of
24the cemetery merchandise, cemetery services and undeveloped
25spaces included in such contract, except that, in the case of

 

 

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1deposits for outer burial containers, deposits shall be made
2until the amount deposited in trust equals 85% of the sales
3price. In the event an installment contract is factored,
4discounted or sold to a third party, the seller shall deposit
5an amount equal to 50% of the sales price of the installment
6contract, except that, for the portion of the contract
7attributable to the sale of outer burial containers, the seller
8shall deposit an amount equal to 85% of the sales price.
9Proceeds required to be deposited in trust which are
10attributable to cemetery merchandise and cemetery services
11shall be held in a "Cemetery Merchandise Trust Fund". Proceeds
12required to be deposited in trust which are attributable to the
13sale of undeveloped interment, entombment or inurnment spaces
14shall be held in a "Pre-construction Trust Fund". If
15merchandise is delivered for storage in a bonded warehouse, as
16authorized herein, and payment of transportation or other
17charges totaling more than $20 will be required in order to
18secure delivery to the site of ultimate use, upon such delivery
19to the warehouse the seller shall deposit to the trust fund the
20full amount of the actual or estimated transportation charge.
21Transportation charges which have been prepaid by the seller
22shall not be deposited to trust funds maintained pursuant to
23this Section. As used in this Section, "all proceeds" means the
24entire amount paid by a purchaser in connection with a pre-need
25sales contract, including finance charges and Cemetery Care Act
26contributions, but excluding sales taxes and credit life

 

 

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1insurance premiums.
2    (b) The seller shall act as trustee of all amounts received
3for cemetery merchandise, services, or undeveloped spaces
4until those amounts have been deposited into the trust fund.
5All trust deposits required by this Act shall be made within 30
6days following the end of the month of receipt. The seller must
7retain a corporate fiduciary as an independent trustee for any
8amount of trust funds. Upon 30 days' prior written notice from
9the seller to the Comptroller, the seller may change the
10trustee of the trust fund. Failure to provide the Comptroller
11with timely prior notice is an intentional violation of this
12Act.
13    (c) A trust established under this Act must be maintained
14with a corporate fiduciary as defined in Section 1-5.05 of the
15Corporate Fiduciary Act or with a foreign corporate fiduciary
16recognized by Article IV of the Corporate Fiduciary Act.
17    (d) Funds deposited in the trust account shall be
18identified in the records of the seller by the name of the
19purchaser. Nothing shall prevent the trustee from commingling
20the deposits in any such trust fund for purposes of the
21management thereof and the investment of funds therein as
22provided in the "Common Trust Fund Act", approved June 24,
231949, as amended. In addition, multiple trust funds maintained
24pursuant to this Act may be commingled or commingled with other
25funeral or burial related trust funds, provided that all record
26keeping requirements imposed by or pursuant to law are met.

 

 

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

 

 

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1sufficient security.
2    All performance bonds issued pursuant to this Section must
3be irrevocable during the statutory term for completing
4construction specified in Section 19 of this Act, unless
5terminated sooner by the completion of construction.
6    (f) Whenever any pre-need contract shall be entered into
7and include 1) items of cemetery merchandise and cemetery
8services, and 2) rights to interment, inurnment or entombment
9in completed spaces without allocation of the gross sale price
10among the items sold, the application of payments received
11under the contract shall be allocated, first to the right to
12interment, inurnment or entombment, second to items of cemetery
13merchandise and cemetery services, unless some other
14allocation is clearly provided in the contract.
15    (g) Any person engaging in pre-need sales who enters into a
16combination sale which involves the sale of items covered by a
17trust or performance bond requirement and any item not covered
18by any entrustment or bond requirement, shall be prohibited
19from increasing the gross sales price of those items not
20requiring entrustment with the purpose of allocating a lesser
21gross sales price to items which require a trust deposit or a
22performance bond.
23    (h) This Section applies only to pre-need sales entered
24into prior to the effective date of this amendatory Act of the
2599th General Assembly.
26(Source: P.A. 96-879, eff. 2-2-10; 97-593, eff. 8-26-11.)
 

 

 

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1    (815 ILCS 390/15.5 new)
2    Sec. 15.5. Disclosures; options. Beginning on the
3effective date of this amendatory Act of the 99th General
4Assembly, before a seller and purchaser enter into a pre-need
5sales contract, the seller must disclose and fully explain that
6the purchaser may fund the pre-need sales contract by choosing
7one of the following options:
8        (1) depositing funds into a local banking institution
9    of the purchaser's choosing;
10        (2) depositing funds into a trust program operated by
11    the seller; or
12        (3) other means offered by the seller.
13    The purchaser shall then choose one of those options.
 
14    (815 ILCS 390/17)  (from Ch. 21, par. 217)
15    Sec. 17. (a) The principal and undistributed income of the
16trust created pursuant to Section 15 or Section 15.5 of this
17Act shall be paid to the seller if:
18    (1) the seller certifies by sworn affidavit to the trustee
19that the purchaser or the beneficiary named in the pre-need
20contract has deceased and that seller has fully delivered or
21installed all items included in the pre-need contract and fully
22performed all pre-need cemetery services he is required to
23perform under the pre-need contract; or
24    (2) the seller certifies by sworn affidavit to the trustee

 

 

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1that seller has made full delivery, as defined herein.
2(Source: P.A. 84-239.)
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    225 ILCS 45/1from Ch. 111 1/2, par. 73.101
4    225 ILCS 45/1afrom Ch. 111 1/2, par. 73.101a
5    225 ILCS 45/1c new
6    815 ILCS 390/4from Ch. 21, par. 204
7    815 ILCS 390/15from Ch. 21, par. 215
8    815 ILCS 390/15.5 new
9    815 ILCS 390/17from Ch. 21, par. 217