Full Text of SB2364 95th General Assembly
SB2364 95TH GENERAL ASSEMBLY
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95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008 SB2364
Introduced 2/14/2008, by Sen. Pamela J. Althoff SYNOPSIS AS INTRODUCED: |
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225 ILCS 45/1a |
from Ch. 111 1/2, par. 73.101a |
225 ILCS 45/1a-1 |
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225 ILCS 45/1a-2 new |
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225 ILCS 45/1b |
from Ch. 111 1/2, par. 73.101b |
30 ILCS 105/5.708 new |
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Amends the Illinois Funeral or Burial Funds Act. Removes references to finance charges from the definition of "sales proceeds" and "purchase price". Allows a purchaser to cancel a pre-need contract within 30 days after all parties have signed the contract and receive 100% of all payments made under the contract. Creates the Pre-need Funeral Contract Guarantee Fund, into which $5 from each pre-need contract sold by a licensee under the Act shall be deposited. Provides that the Fund shall be used by the Comptroller to pay restitution to purchasers who are unable to receive the benefits of a pre-need contract or to receive the funds due by reason of cancellation of a pre-need contract. Removes an exception that allows a trustee to be the seller or provider of funeral services or merchandise. Makes other changes. Amends the State Finance Act to establish the new Fund.
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A BILL FOR
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| AN ACT concerning regulation.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Illinois Funeral or Burial Funds Act is | 5 |
| amended by changing Sections 1a, 1a-1, and 1b and by adding | 6 |
| Section 1a-2 as follows:
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| (225 ILCS 45/1a) (from Ch. 111 1/2, par. 73.101a)
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| Sec. 1a. For the purposes of this Act, the following terms | 9 |
| shall have
the meanings specified, unless the context clearly | 10 |
| requires another meaning:
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| "Beneficiary" means the person specified in the pre-need | 12 |
| contract upon
whose death funeral services or merchandise shall | 13 |
| be provided or delivered.
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| "Licensee" means a seller of a pre-need contract who has
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| been licensed by
the Comptroller under this Act.
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| "Outer burial container" means any container made of | 17 |
| concrete,
steel, wood, fiberglass or similar material, used | 18 |
| solely at the interment
site, and designed and used exclusively | 19 |
| to surround or enclose a separate
casket and to support the | 20 |
| earth above such casket, commonly known as a
burial vault, | 21 |
| grave box or grave liner, but not including a lawn
crypt as | 22 |
| defined in the Illinois Pre-need Cemetery Sales Act.
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| "Parent company" means a corporation owning more than 12 |
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| cemeteries or
funeral homes in more than one state.
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| "Person" means any person, partnership, association, | 3 |
| corporation, or
other entity.
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| "Pre-need contract" means any agreement or contract, or any | 5 |
| series or
combination of agreements or contracts, whether | 6 |
| funded by trust deposits or
life insurance policies or | 7 |
| annuities, which has for a purpose the furnishing
or | 8 |
| performance of funeral services or the furnishing or delivery | 9 |
| of any
personal property, merchandise, or services of any | 10 |
| nature in connection with
the final disposition of a dead human | 11 |
| body. Nothing in this Act is intended to
regulate the content | 12 |
| of a life insurance policy or a tax-deferred annuity.
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| "Provider" means a person who is obligated for furnishing | 14 |
| or performing
funeral services or the furnishing or delivery of | 15 |
| any personal property,
merchandise, or services of any nature | 16 |
| in connection with the final disposition
of a dead human body.
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| "Purchaser" means the person who originally paid the money | 18 |
| under or in
connection with a pre-need contract.
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| "Sales proceeds" means the entire amount paid to a seller, | 20 |
| exclusive
of sales taxes paid by the seller, finance charges | 21 |
| paid by the purchaser, and
credit life, accident or disability | 22 |
| insurance premiums, upon any agreement or
contract, or series | 23 |
| or combination of agreements or contracts, for the purpose
of | 24 |
| performing funeral services or furnishing personal property, | 25 |
| merchandise, or
services of any nature in connection with the | 26 |
| final disposition of a dead human
body, including, but not |
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LRB095 19535 RAS 46148 b |
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| limited to, the retail price paid for such services
and | 2 |
| personal property and merchandise.
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| "Purchase price" means sales proceeds less finance charges | 4 |
| on
retail
installment contracts .
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| "Seller" means the person who sells or
offers to sell the | 6 |
| pre-need contract
to a purchaser, whether funded by a trust | 7 |
| agreement, life insurance policy,
or tax-deferred annuity.
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| "Trustee" means a person authorized to hold funds under | 9 |
| this Act.
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| (Source: P.A. 92-419, eff. 1-1-02.)
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| (225 ILCS 45/1a-1)
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| Sec. 1a-1. Pre-need contracts.
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| (a) It shall be unlawful for any seller doing business
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| within
this State to accept sales proceeds from a purchaser, | 15 |
| either directly or
indirectly by any means, unless the seller | 16 |
| enters into a
pre-need contract
with the purchaser which meets | 17 |
| the following requirements:
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| (1) It states the name and address of the principal | 19 |
| office of the
seller and the parent company of the
seller, | 20 |
| if
any.
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| (2) It clearly identifies the provider's name and
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| address,
the purchaser, and
the beneficiary, if other than | 23 |
| the purchaser.
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| (2.5) If the provider has branch locations, the | 25 |
| contract
gives the purchaser the opportunity to identify |
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| the branch
at which the funeral will be provided.
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| (3) It contains a complete description of the funeral | 3 |
| merchandise and
services to be provided and the price of | 4 |
| the merchandise and services, and it
clearly discloses | 5 |
| whether the price of the merchandise and services is
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| guaranteed or not guaranteed as to price.
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| (A) Each guaranteed price contract shall contain | 8 |
| the following
statement in 12 point bold type:
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| THIS CONTRACT GUARANTEES THE BENEFICIARY THE | 10 |
| SPECIFIC GOODS AND
SERVICES CONTRACTED FOR. NO | 11 |
| ADDITIONAL CHARGES MAY BE REQUIRED.
FOR DESIGNATED | 12 |
| GOODS AND SERVICES, ADDITIONAL CHARGES MAY BE INCURRED | 13 |
| FOR
UNEXPECTED EXPENSES INCLUDING, BUT NOT LIMITED TO, | 14 |
| CASH ADVANCES, SHIPPING OF
REMAINS FROM A DISTANT | 15 |
| PLACE, OR DESIGNATED HONORARIA ORDERED OR DIRECTED BY
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| SURVIVORS.
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| (B) Except as provided in subparagraph (C) of this | 18 |
| paragraph (3),
each non-guaranteed price contract | 19 |
| shall contain the following
statement in 12 point bold | 20 |
| type:
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| THIS CONTRACT DOES NOT GUARANTEE THE PRICE THE | 22 |
| BENEFICIARY WILL PAY FOR
ANY SPECIFIC GOODS OR | 23 |
| SERVICES. ANY FUNDS PAID UNDER THIS CONTRACT ARE ONLY A
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| DEPOSIT TO BE APPLIED TOWARD THE FINAL PRICE OF THE | 25 |
| GOODS OR SERVICES
CONTRACTED FOR. ADDITIONAL CHARGES | 26 |
| MAY BE REQUIRED.
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| (C) If a non-guaranteed price contract may
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| subsequently become guaranteed, the contract shall | 3 |
| clearly
disclose the nature of the guarantee and the | 4 |
| time,
occurrence, or event upon which the contract | 5 |
| shall become a
guaranteed price contract.
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| (4) It provides that if the particular supplies and | 7 |
| services specified
in the pre-need contract are | 8 |
| unavailable at the time of delivery, the provider
shall be | 9 |
| required to furnish supplies and services similar in style | 10 |
| and at
least equal in quality of material and workmanship.
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| (5) It discloses any penalties or restrictions, | 12 |
| including
but not limited
to geographic restrictions or the | 13 |
| inability of the provider
to
perform, on the delivery of | 14 |
| merchandise, services, or pre-need contract
guarantees.
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| (6) Regardless of the method of funding the pre-need | 16 |
| contract, the
following must be disclosed:
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| (A) Whether the pre-need contract is to be funded | 18 |
| by a trust, life
insurance, or an annuity;
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| (B) The nature of the relationship among the person
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| funding the
pre-need contract, the provider, and the
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| seller; and
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| (C) The impact on the pre-need contract of (i) any | 23 |
| changes in the
funding arrangement including but not | 24 |
| limited to changes in the assignment,
beneficiary | 25 |
| designation, or use of the funds; (ii) any specific | 26 |
| penalties
to be incurred
by the contract purchaser as a |
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| result of failure to make payments; (iii)
penalties to | 2 |
| be incurred or moneys or refunds to be received as a | 3 |
| result of
cancellations; and (iv) all relevant | 4 |
| information concerning what occurs and
whether any | 5 |
| entitlements or obligations arise if there is a | 6 |
| difference between
the proceeds of the particular | 7 |
| funding arrangement and the amount actually
needed to | 8 |
| pay for the funeral at-need.
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| (D) The method of changing the
provider.
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| (b) All pre-need contracts are subject to the Federal Trade | 11 |
| Commission Rule
concerning the Cooling-Off Period for | 12 |
| Door-to-Door Sales (16 CFR Part 429). | 13 |
| (b-5) A purchaser may cancel a pre-need contract within 30 | 14 |
| days after all parties have signed the contract and shall | 15 |
| receive 100% of all payments made under the contract. In the | 16 |
| case of a pre-need contract funded by a pre-need insurance | 17 |
| policy, the cancellation period under this subsection (b-5) | 18 |
| shall continue until 30 days after signing the contract or 30 | 19 |
| days plus the period for free cancellation of the policy under | 20 |
| the terms of the policy or applicable law, whichever is later. | 21 |
| No fee, surcharge, penalty, or liquidated damages may be | 22 |
| imposed upon this right to cancel.
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| (c) No pre-need contract shall be sold in this State unless
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| there is a provider for the services and personal property | 25 |
| being
sold. If the seller is not a provider, then the seller | 26 |
| must have a binding agreement with a provider, and
the identity |
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| of the provider and the nature of the agreement between the | 2 |
| seller
and the provider shall be disclosed in the pre-need | 3 |
| contract at the time of the
sale and before the receipt of any | 4 |
| sales proceeds. The failure to disclose the
identity of the | 5 |
| provider, the nature of the agreement between the seller and
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| the provider, or any changes thereto to the purchaser and | 7 |
| beneficiary, or the
failure to make the disclosures required in | 8 |
| subdivision (a)(1), constitutes an
intentional violation of | 9 |
| this Act.
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| (d) All pre-need contracts must be in writing in at least | 11 |
| 11 point type,
numbered, and executed in duplicate. A signed
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| copy of the pre-need contract must be provided to the purchaser | 13 |
| at the time of
entry into the pre-need contract. The | 14 |
| Comptroller may by rule develop
a model pre-need contract form | 15 |
| which meets the requirements of this Act.
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| (e) The State Comptroller shall by rule develop a booklet | 17 |
| for
consumers in plain English describing
the scope, | 18 |
| application, and consumer protections of this Act. After the
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| adoption of these rules, no pre-need contract shall be sold in | 20 |
| this State
unless (i) the seller distributes to the purchaser | 21 |
| prior to the sale a
booklet promulgated or approved for use by | 22 |
| the State Comptroller; (ii) the
seller explains to the | 23 |
| purchaser the terms of the pre-need contract prior to
the | 24 |
| purchaser signing; and (iii) the purchaser initials a statement | 25 |
| in the
contract confirming that the seller has explained the | 26 |
| terms of the contract
prior to the purchaser signing.
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LRB095 19535 RAS 46148 b |
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| (f) All sales proceeds received in connection with a | 2 |
| pre-need
contract shall be deposited into a trust account as | 3 |
| provided in
Section 1b and Section 2 of this Act, or shall be | 4 |
| used to purchase a life
insurance policy or tax-deferred | 5 |
| annuity as provided in Section 2a
of this Act.
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| (g) No pre-need contract shall be sold in this State unless | 7 |
| it is
accompanied by a funding mechanism permitted under this | 8 |
| Act, and unless the
seller is licensed by the Comptroller as | 9 |
| provided in Section 3
of this Act.
Nothing in this Act is | 10 |
| intended to relieve sellers of pre-need
contracts from
being | 11 |
| licensed under any other Act required for their profession or | 12 |
| business,
and being subject to the rules promulgated to | 13 |
| regulate their profession or
business, including rules on | 14 |
| solicitation and advertisement.
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| (Source: P.A. 92-419, eff. 1-1-02.)
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| (225 ILCS 45/1a-2 new) | 17 |
| Sec. 1a-2. Pre-need Funeral Contract Guarantee Fund. | 18 |
| (a) Each licensee shall pay a fee of $5 out of the funds | 19 |
| received for each pre-need contract sold and shall forward this | 20 |
| sum to the Comptroller within 10 days after (i) the funds | 21 |
| required to be placed in trust pursuant to Section 1b of this | 22 |
| Act are deposited into the trust account or (ii) the funds are | 23 |
| used to purchase a pre-need insurance policy. The pre-need | 24 |
| contract shall be recorded by the Comptroller. Within 10 days | 25 |
| after receiving the fee, the Comptroller must notify the |
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| purchaser by mail of the recording of the pre-need contract. | 2 |
| Fees collected under this Section shall be deposited into the | 3 |
| Pre-need Funeral Contract Guarantee Fund, which is hereby | 4 |
| created as a special fund in the State treasury. Moneys in the | 5 |
| Fund may be expended to purchase insurance to cover losses | 6 |
| guaranteed by the Fund. | 7 |
| (b) In the event that the purchaser is unable to receive | 8 |
| the benefits of his or her pre-need contract or to receive the | 9 |
| funds due by reason of cancellation of the contract, the | 10 |
| purchaser may apply to the Comptroller on a form prescribed by | 11 |
| the Comptroller for restitution from the Pre-need Funeral | 12 |
| Contract Guarantee Fund. Upon a finding by the Comptroller that | 13 |
| the benefits or return of payment is not available to the | 14 |
| purchaser, the Comptroller may cause restitution to be paid to | 15 |
| the purchaser from the Pre-need Funeral Contract Guarantee | 16 |
| Fund. | 17 |
| (c) In all such cases where a purchaser is paid restitution | 18 |
| from the Fund, the Comptroller shall be subrogated to that | 19 |
| purchaser's claims against the licensee for all amounts paid | 20 |
| from the Fund. If the licensee's liability for default is | 21 |
| subsequently proven, any award made by a court of law shall be | 22 |
| made payable to the Pre-need Funeral Contract Guarantee Fund up | 23 |
| to the amount paid to the purchaser from the Fund and the | 24 |
| Comptroller shall request that the Attorney General engage in | 25 |
| all reasonable post-judgment collection steps to collect such | 26 |
| claims from the judgment debtor and reimburse the Fund. |
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| (d) The Fund shall not be applied toward any restitution | 2 |
| for losses in any lawsuit initiated by the Attorney General or | 3 |
| Comptroller or with respect to any claim made on a pre-need | 4 |
| contract that occurred prior to the effective date of this | 5 |
| amendatory Act of the 95th General Assembly. | 6 |
| (e) Notwithstanding any other provision of this Section, | 7 |
| the payment of restitution from the Fund shall be a matter of | 8 |
| grace and not of right and no purchaser shall have any vested | 9 |
| rights in the Fund as a beneficiary or otherwise. | 10 |
| (f) The Fund may not be allocated for any purpose other | 11 |
| than that specified in this Act.
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| (225 ILCS 45/1b) (from Ch. 111 1/2, par. 73.101b)
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| Sec. 1b. (a) Whenever a seller receives sales proceeds | 14 |
| under a pre-need
contract that the purchaser elects to fund by | 15 |
| a trust agreement, the seller may
retain an initial amount | 16 |
| equal to 5% of the purchase price of the services,
personal | 17 |
| property or merchandise, or 15% of the purchase price of outer | 18 |
| burial
containers. Thereafter, a seller shall deposit into | 19 |
| trust the amounts specified
in this Section so that no later | 20 |
| than upon the final payment on the contract,
the trust shall | 21 |
| equal or exceed 95% of the purchase price of all services,
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| personal property, or merchandise, except for outer burial | 23 |
| containers, and 85%
of the purchase price of outer burial | 24 |
| containers.
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| (b) In the event that sales proceeds to be deposited into a |
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| trust are
received pursuant to a cash sale or an a retail | 2 |
| installment contract, the seller
may retain the initial | 3 |
| percentage authorized by subsection (a) of this Section
and any | 4 |
| finance charge paid by the purchaser , and thereafter shall | 5 |
| deposit into
the trust the entire balance of sales proceeds | 6 |
| received.
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| (c) In the event that the deposits into a trust required by | 8 |
| this Section do
not, after final payment by the consumer, | 9 |
| result in the trust containing at
least 95% of the sales price | 10 |
| of all services, personal property or merchandise,
except for | 11 |
| outer burial containers and 85% of the purchase price of outer
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| burial containers, the seller shall make an additional deposit | 13 |
| into the trust
in an amount sufficient to meet these | 14 |
| percentages.
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| (d) The trustee may not be the seller or provider of | 16 |
| funeral services or
merchandise unless the seller holds sales | 17 |
| of less than $500,000 in trust, and
deposits funds for which | 18 |
| the seller is acting as trustee in (1) withdrawable
accounts of | 19 |
| State chartered or federally chartered savings and loan
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| associations insured by the Federal Deposit Insurance | 21 |
| Corporation; (2) deposits
or certificates of deposits in State | 22 |
| or federal banks insured by the Federal
Deposit Insurance | 23 |
| Corporation; or (3) share accounts or share certificate
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| accounts in a State or federal credit union, the accounts of | 25 |
| which are insured
as required by the Illinois Credit Union Act | 26 |
| or the Federal Credit Union Act,
as applicable .
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SB2364 |
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LRB095 19535 RAS 46148 b |
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| (Source: P.A. 88-477.)
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| Section 90. The State Finance Act is amended by adding | 3 |
| Section 5.708 as follows: | 4 |
| (30 ILCS 105/5.708 new) | 5 |
| Sec. 5.708. The Pre-need Funeral Contract Guarantee Fund.
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