§ 1272 - Rules; prepaid funeral funds
§ 1272. Rules; prepaid funeral funds
The board, with the assistance of the office of professional regulation, shall adopt rules to carry out the provisions of this subchapter to insure the proper handling of all funds paid pursuant to a prepaid funeral agreement and to protect consumers in the event of default. The rules shall include provisions relating to the following:
(1) The timely establishment of escrow accounts and verification of the establishment of an account. An escrow account shall be maintained by a federally insured depository institution, but shall not be required to be maintained by a trust department, an insurance company licensed to do business in Vermont that is a member of the Vermont's Property and Casualty Insurance Guaranty Association established by subchapter 9 of chapter 101 of Title 8, or a trust company chartered by the state of Vermont, if that insurance or trust company is a federally insured depository.
(2) The appointment of an escrow agent who may be a bank or other category of individual such as an attorney, a local elected official, next of kin, or the executor of a buyer's estate. All prepaid arrangement funds shall be paid directly to the escrow agent and not to the funeral director or establishment.
(3) Permissible investments to include demand and time deposits, certificates of deposit, bonds of the United States or its agencies, bonds of the state of Vermont, bonds of a Vermont municipality and bonds in which savings banks in this state may, by law, invest.
(4) The crediting of income earned by an escrow account, use of the taxpayer identification number and the deduction of reasonable administrative costs, taxes and bank fees. The beneficiary shall be considered to be the owner of irrevocable escrow accounts.
(5) Information to be provided the escrow agent by the funeral director and information regarding the escrow account or the prepaid funeral that shall be made available to the buyer on request and annually in a format as determined by the board.
(6) Records to be kept, manner of disclosure, and clauses to be included in contracts, including pre-need trust forms, and agreements. Records shall include a copy of the prepaid arrangement check which shall be kept in the prepaid account file maintained by the funeral director.
(7) Preparation of appropriate tax and other reports.
(8) Other factors determined by the board to be reasonably necessary to insure the security of the funds paid into an escrow account as part of a prepaid funeral arrangement.
(9) Establishment of a funeral services trust account. For purposes of funding the funeral services trust account, the board or the office of professional regulation shall assess each funeral or crematory establishment a per funeral, burial, or disposition fee of $6.00. The account shall be administered by the secretary of state and shall be used for the sole purpose of protecting prepaid funeral contract holders in the event a funeral establishment defaults on its obligations under the contract. The account shall consist of all fees collected under this subdivision and any assessments authorized by the general assembly. The principal and interest remaining in the account at the close of any fiscal year shall not revert but shall remain in the account for use in succeeding fiscal years. Notwithstanding the foregoing, if the fund balance at the beginning of a fiscal year is at least $200,000.00, no fees shall be imposed during that fiscal year. Payments on consumer claims from the fund shall be made on warrants by the commissioner of finance and management, at the direction of the board of funeral services. When an investigation reveals financial discrepancies within a licensed establishment, the director may order an audit to determine the existence of possible claims on the funeral services trust account. In cases where both a funeral and crematory establishment are involved in a disposition, the party receiving the burial permit shall be responsible for the disposition fee. (Added 1991, No. 219 (Adj. Sess.), § 5, eff. Jan. 1, 1993; amended 1995, No. 138 (Adj. Sess.), § 8; 1997, No. 50, § 2, eff. June 26, 1997; 2001, No. 151 (Adj. Sess.), § 19, eff. June 27, 2002; 2005, No. 27, § 44a; 2009, No. 35, § 22.)