62-5-407 - Pre-need funeral contracts funded by trusts.
62-5-407. Pre-need funeral contracts funded by trusts.
(a) Every pre-need seller engaged in the business of selling pre-need funeral contracts funded by a trust shall establish a pre-need funeral trust fund. The trust fund shall be established by executing a written trust agreement with a trustee as defined in § 62-5-403; provided, that a pre-need seller may change the trustee of its trust fund by providing written notice to the commissioner no later than thirty (30) days prior to the change, along with evidence sufficient to the commissioner that the trustee will be able to comply with the requirements of this part. If the commissioner determines that the evidence submitted is insufficient to ensure that the trustee will be able to comply with the requirements of this part, the commissioner may refuse to allow the pre-need seller to change the trustee. If the commissioner does not object to the change of trustee within sixty (60) calendar days of receiving a request, the current trustee shall have not less than ninety (90) calendar days from the date it receives notice of the proposed change to transfer all trust assets held by the trustee to the successor trustee.
(b) If the pre-need funeral contract purchaser chooses to fund the pre-need funeral contract by a trust deposit or deposits, the pre-need seller shall deposit all funds with the trustee, to be held in trust, within fifteen (15) calendar days of receipt. The pre-need seller, at the time of making the deposit, shall furnish to the trustee the name of each pre-need funeral contract beneficiary and the amount of payment on each for which the deposit is being made. The trustee may establish a separate trust fund for each pre-need funeral contract or a single trust fund for all pre-need funeral contracts issued by a pre-need seller. The trust accounts shall be carried in the name of the pre-need seller, but accounting records shall be established and maintained for each individual pre-need funeral contract beneficiary showing the amounts deposited and invested, and interest, dividends, increases, and accretions earned.
(c) Funds deposited in trust under a pre-need funeral contract may, with the written permission of the pre-need funeral contract purchaser and written approval of the commissioner, be withdrawn by the trustee and used to purchase a prearrangement insurance policy. The trustee shall disclose, in writing, the terms of the prearrangement insurance policy to the pre-need funeral contract purchaser. Except as provided in this subsection (c), no funds deposited in trust with a trustee pursuant to this section shall be withdrawn by the trustee to purchase a prearrangement insurance policy.
(d) No pre-need seller, affiliate of a pre-need seller, or any person directly or indirectly engaged in the burial, funeral home, or cemetery business may act as trustee for any pre-need funeral trust. No pre-need seller, affiliate of a pre-need seller, or any person directly or indirectly engaged in the burial, funeral home, or cemetery business may share in the responsibilities of or direct the actions of the trustee of a pre-need funeral trust fund.
(e) It is unlawful to loan pre-need funeral trust funds to a pre-need seller, an affiliate of a pre-need seller, or any person directly or indirectly engaged in the burial, funeral home, or cemetery business. Furthermore, the pre-need seller's interest in the trust shall not be pledged as collateral for any loans, debts, or liabilities of the pre-need seller and shall not be transferred to any person without the prior written approval from the commissioner and the trustee.
[Acts 2007, ch. 592, § 8.]