§ 90-210.61. Deposit or application of preneed funeral funds.
§ 90‑210.61. Deposit or application of preneed funeral funds.
(a) Preneed funeral funds are subject to the provisions of thisArticle and shall be deposited or applied as follows:
(1) If the preneed funeral contract purchaser chooses to fundthe preneed funeral contract by a trust deposit or deposits, the preneedlicensee shall deposit all funds in an insured account in a financialinstitution, in trust, in the preneed licensee's name as trustee within fivebusiness days. The preneed licensee, at the time of making the deposit astrustee, shall furnish to the financial institution the name of each preneedfuneral contract purchaser and the amount of payment on each for which thedeposit is being made. The preneed licensee may establish an individual trust fundfor each preneed funeral contract or a common trust fund for all preneedfuneral contracts. The trust accounts shall be carried in the name of thepreneed licensee as trustee, but accounting records shall be maintained foreach individual preneed funeral contract purchaser showing the amountsdeposited and invested, and interest, dividends, increases, and accretionsearned. Except as provided in this Article, all interest, dividends, increases,or accretions earned by the funds shall remain with the principal. The trustfund may be charged with applicable taxes and for reasonable charges paid bythe trustee to itself or others for the preparation of fiduciary tax returns.Penalties charged by a financial institution for early withdrawals caused by atransfer pursuant to G.S. 90‑210.63 shall be paid by the preneedlicensee. Penalties charged as a result of other early withdrawals as permittedby this Article shall be paid from the trust fund, and the financialinstitution shall give the preneed funeral contract purchaser prompt notice ofthese penalties.
(2) Notwithstanding any other provision of law, if a preneedfuneral contract is funded by a trust deposit or trust deposits, a preneedlicensee may retain, free of the trust, up to ten percent (10%) of any paymentsmade on a preneed funeral contract, provided that the preneed licensee fullydiscloses in writing in advance to the preneed funeral contract purchaser thepercentage of the payments to be retained. If there is no substitution pursuantto G.S. 90‑210.63(a), the preneed licensee shall give credit for theamount retained upon the death of the preneed funeral contract beneficiary andperformance of the preneed funeral contract.
(3) If the preneed funeral contract purchaser chooses to fundthe contract by a prearrangement insurance policy, the preneed licensee shallapply all funds received for this purpose to the purchase of the prearrangementinsurance policy within five business days. The preneed licensee shall notifythe insurance company of the name of each preneed funeral contract purchaserand the amount of each payment when the prearrangement insurance policy orpolicies are purchased.
(b) Except as provided by this Article or by the preneed funeralcontract, all payments made by the purchaser of a preneed funeral contract orprearrangement insurance policy shall remain trust funds within a financialinstitution or as paid insurance premiums with an insurance company, as thecase may be, until the death of the preneed funeral contract beneficiary anduntil full performance of the preneed funeral contract.
(c) Each preneed licensee may establish and maintain with afinancial institution of its choice, a preneed funeral fund clearing account.Preneed funeral funds received by a preneed licensee may be deposited and heldin such an account until disbursed by the preneed licensee to fund a preneedfuneral contract pursuant to subdivisions (a)(1) or (a)(3) of this section.This account shall be used solely for the receipt and disbursement of preneedfuneral funds.
(d) Funds deposited in trust under a revocable standard preneedfuneral contract may, with the written permission of the preneed funeralcontract purchaser, be withdrawn by the trustee and used to purchase aprearrangement insurance policy. Except as provided in this subsection, nofunds deposited in trust in a financial institution pursuant to this Articleshall be withdrawn by the trustee to purchase a prearrangement insurancepolicy.
(e) Except as provided by G.S. 90‑210.61(c), at no timebefore making a deposit or purchasing a prearrangement insurance policy may apreneed licensee, or its agents or employees, deposit in its own account or theaccount of any other person any monies coming into its hands for the purpose ofpurchasing services, merchandise, or prearrangement insurance policies underthe provisions of this Article. (1969, c. 187, ss. 2, 4; 1981 (Reg. Sess., 1982), c. 1336, s. 1; 1983,c. 657, ss. 2, 4; 1985, c. 12, ss. 1‑3; 1987, c. 430, ss. 15, 16; c. 879,s. 6.2; 1989, c. 485, s. 16; c. 738, s. 2; 1991 (Reg. Sess., 1992), c. 901, s.2.)