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91_HB2081sam002
LRB9103838DJcdam04
1 AMENDMENT TO HOUSE BILL 2081
2 AMENDMENT NO. . Amend House Bill 2081, AS AMENDED,
3 as follows:
4 in the introductory clause of Section 2, by replacing
5 "changing Section 1" with "changing Sections 1 and 4a and
6 adding Section 4b"; and
7 in Section 2, after the last line of Sec. 1, by inserting the
8 following:
9 "(225 ILCS 45/4a)
10 Sec. 4a. Investment of funds.
11 (a) A trustee shall, with respect to the investment of
12 trust funds, exercise the judgment and care under the
13 circumstances then prevailing that persons of prudence,
14 discretion, and intelligence exercise in the management of
15 their own affairs, not in regard to speculation, but in
16 regard to the permanent disposition of their funds,
17 considering the probable income as well as the probable
18 safety of their capital.
19 (b) The trust shall be a single-purpose trust fund. In
20 the event of the seller's bankruptcy, insolvency or
21 assignment for the benefit of creditors, or an adverse
22 judgment, the trust funds shall not be available to any
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1 creditor as assets of the seller or to pay any expenses of
2 any bankruptcy or similar proceeding, but shall be
3 distributed to the purchasers or managed for their benefit by
4 the trustee holding the funds. Except in an action by the
5 Comptroller to revoke a license issued pursuant to this Act
6 and for creation of a receivership as provided in this Act,
7 the trust shall not be subject to judgment, execution,
8 garnishment, attachment, or other seizure by process in
9 bankruptcy or otherwise, nor to sale, pledge, mortgage, or
10 other alienation, and shall not be assignable except as
11 approved by the Comptroller. The changes made by this
12 amendatory Act of the 91st General Assembly are intended to
13 clarify existing law regarding the inability of licensees to
14 pledge the trust.
15 (c) Because it is not known at the time of deposit or at
16 the time that income is earned on the trust account to whom
17 the principal and the accumulated earnings will be
18 distributed for the purpose of determining the Illinois
19 income tax due on these trust funds, the principal and any
20 accrued earnings or losses related to each individual account
21 shall be held in suspense until the final determination is
22 made as to whom the account shall be paid. The beneficiary's
23 estate shall not be responsible for any funeral and burial
24 purchases listed in a pre-need contract if the pre-need
25 contract is entered into on a guaranteed price basis.
26 If a pre-need contract is not a guaranteed price
27 contract, then to the extent the proceeds of a non-guaranteed
28 price pre-need contract cover the funeral and burial expenses
29 for the beneficiary, no claim may be made against the estate
30 of the beneficiary. A claim may be made against the
31 beneficiary's estate if the charges for the funeral services
32 and merchandise at the time of use exceed the amount of the
33 amount in trust plus the percentage of the sale proceeds
34 initially retained by the seller or the face value of the
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1 life insurance policy or tax-deferred annuity.
2 (d) Trust funds shall not be invested by the trustee in
3 life insurance policies or tax-deferred annuities unless the
4 following requirements are met:
5 (1) The company issuing the life insurance policies
6 or tax-deferred annuities is licensed by the Illinois
7 Department of Insurance and the insurance producer or
8 annuity seller is licensed to do business in the State of
9 Illinois;
10 (2) Prior to the investment, the purchaser
11 approves, in writing, the investment in life insurance
12 policies or tax-deferred annuities;
13 (3) Prior to the investment, the purchaser is
14 notified by the seller in writing about the disclosures
15 required for all pre-need contracts under Section 1a-1 of
16 this Act, and the purchase of life insurance or a
17 tax-deferred annuity is subject to the requirements of
18 Section 2a of this Act;
19 (4) Prior to the investment, the trustee informs
20 the Comptroller that trust funds shall be removed from
21 the trust account to purchase life insurance or a
22 tax-deferred annuity upon the written consent of the
23 purchaser;
24 (5) The purchaser retains the right to refund
25 provided for in this Act, unless the pre-need contract is
26 sold on an irrevocable basis as provided in Section 4 of
27 this Act; and
28 (6) Notice must be given in writing that the cash
29 surrender value of a life insurance policy may be less
30 than the amount provided for by the refund provisions of
31 the trust account.
32 (Source: P.A. 88-477.)
33 (225 ILCS 45/4b new)
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1 Sec. 4b. Licensee bankruptcy. In the event of a
2 licensee's bankruptcy, insolvency, or assignment for the
3 benefit of creditors, or in the event of the bankruptcy,
4 insolvency, or assignment for the benefit of creditors of any
5 person, partnership, association, corporation, or other
6 entity that possesses a controlling interest in a licensee,
7 the licensee shall provide notice in writing of that event to
8 each purchaser of a pre-need sales contract or a pre-need
9 contract within 30 days after the event of bankruptcy,
10 insolvency, or assignment for the benefit of creditors. At a
11 minimum, the notice must contain the following:
12 (1) The name and address of the licensee.
13 (2) If different from the licensee, the name and
14 address of the party that is the subject of the
15 bankruptcy, insolvency, or assignment for the benefit of
16 creditors.
17 (3) A brief description of the event of bankruptcy,
18 insolvency, or assignment for the benefit of creditors.
19 (4) The case name or other identifying title of any
20 matter pending in any court, federal or State, pertaining
21 to the bankruptcy, insolvency, or assignment for the
22 benefit of creditors.
23 (5) The name and address of the court in which the
24 bankruptcy, insolvency, or assignment for the benefit of
25 creditors is pending.
26 (6) A description of any action the purchaser must
27 undertake to file a claim or to protect the purchaser's
28 interests, including the purchaser's right to a refund
29 under this Act."; and
30 by replacing the introductory clause of Section 5 with the
31 following:
32 "Section 5. The Cemetery Care Act is amended by changing
33 Sections 4 and 15 as follows:
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1 (760 ILCS 100/4) (from Ch. 21, par. 64.4)
2 Sec. 4. Care funds; deposits; investments. Whenever a
3 cemetery authority owning, operating, controlling or managing
4 a privately operated cemetery accepts care funds, either in
5 connection with the sale or giving away at an imputed value
6 of an interment right, entombment right or inurnment right,
7 or in pursuance of a contract, or whenever, as a condition
8 precedent to the purchase or acceptance of an interment
9 right, entombment right or inurnment right, such cemetery
10 authority requires the establishment of a care fund or a
11 deposit in an already existing care fund, then such cemetery
12 authority shall execute and deliver to the person from whom
13 received an instrument in writing which shall specifically
14 state: (a) the nature and extent of the care to be furnished,
15 and (b) that such care shall be furnished only in so far as
16 the net income derived from the amount deposited in trust
17 will permit (the income from the amount so deposited, less
18 necessary expenditures of administering the trust, shall be
19 deemed the net income), and (c) that not less than the
20 following amounts will be set aside and deposited in trust:
21 1. For interment rights, $1 per square foot of the
22 space sold or 15% of the sales price or imputed value,
23 whichever is the greater, with a minimum of $25 for each
24 individual interment right.
25 2. For entombment rights, not less than 10% of the
26 sales price or imputed value with a minimum of $25 for
27 each individual entombment right.
28 3. For inurnment rights, not less than 10% of the
29 sales price or imputed value with a minimum of $15 for
30 each individual inurnment right.
31 4. For any transfer of interment rights, entombment
32 rights, or inurnment rights recorded in the records of
33 the cemetery authority, excepting only transfers between
34 members of the immediate family of the transferor, a
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1 minimum of $25 for each such right transferred. For the
2 purposes of this paragraph "immediate family of the
3 transferor" means the spouse, parents, grandparents,
4 children, grandchildren, and siblings of the transferor.
5 5. Upon an interment, entombment, or inurnment in a
6 grave, crypt, or niche in which rights of interment,
7 entombment, or inurnment were originally acquired from a
8 cemetery authority prior to January 1, 1948, a minimum of
9 $25 for each such right exercised.
10 6. For the special care of any lot, grave, crypt,
11 or niche or of a family mausoleum, memorial, marker, or
12 monument, the full amount received.
13 Such setting aside and deposit shall be made by such
14 cemetery authority not later than 30 days after the close of
15 the month in which the cemetery authority gave away for an
16 imputed value or received the final payment on the purchase
17 price of interment rights, entombment rights, or inurnment
18 rights, or received the final payment for the general or
19 special care of a lot, grave, crypt or niche or of a family
20 mausoleum, memorial, marker or monument; and such amounts
21 shall be held by the trustee of the care funds of such
22 cemetery authority in trust in perpetuity for the specific
23 purposes stated in said written instrument. For all care
24 funds received by a cemetery authority, except for care funds
25 received by a cemetery authority pursuant to a specific gift,
26 grant, contribution, payment, legacy, or contract that are
27 subject to investment restrictions more restrictive than the
28 investment provisions set forth in this Act, and except for
29 care funds otherwise subject to a trust agreement executed by
30 a person or persons responsible for transferring the specific
31 gift, grant, contribution, payment, or legacy to the cemetery
32 authority that contains investment restrictions more
33 restrictive than the investment provisions set forth in this
34 Act, the cemetery authority may, without the necessity of
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1 having to obtain prior approval from any court in this State,
2 designate a new trustee in accordance with this Act and
3 invest the care funds in accordance with this Section,
4 notwithstanding any contrary limitation contained in the
5 trust agreement.
6 Any such cemetery authority engaged in selling or giving
7 away at an imputed value interment rights, entombment rights
8 or inurnment rights, in conjunction with the selling or
9 giving away at an imputed value any other merchandise or
10 services not covered by this Act, shall be prohibited from
11 increasing the sales price or imputed value of those items
12 not requiring a care fund deposit under this Act with the
13 purpose of allocating a lesser sales price or imputed value
14 to items that require a care fund deposit.
15 In the event any sale that would require a deposit to
16 such cemetery authority's care fund is made by a cemetery
17 authority on an installment basis, and the installment
18 contract is factored, discounted, or sold to a third party,
19 the cemetery authority shall deposit the amount due to the
20 care fund within 30 days after the close of the month in
21 which the installment contract was factored, discounted, or
22 sold. If, subsequent to such deposit, the purchaser defaults
23 on the contract such that no care fund deposit on that
24 contract would have been required, the cemetery authority may
25 apply the amount deposited as a credit against future
26 required deposits.
27 The trust authorized by this Section shall be a single
28 purpose trust fund. In the event of the seller's bankruptcy,
29 insolvency, or assignment for the benefit of creditors, or an
30 adverse judgment, the trust funds shall not be available to
31 any creditor as assets of the cemetery authority or to pay
32 any expenses of any bankruptcy or similar proceeding, but
33 shall be retained intact to provide for the future
34 maintenance of the cemetery. Except in an action by the
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1 Comptroller to revoke a license issued pursuant to this Act
2 and for creation of a receivership as provided in this Act,
3 the trust shall not be subject to judgment, execution,
4 garnishment, attachment, or other seizure by process in
5 bankruptcy or otherwise, nor to sale, pledge, mortgage, or
6 other alienation, and shall not be assignable except as
7 approved by the Comptroller. The changes made by this
8 amendatory Act of the 91st General Assembly are intended to
9 clarify existing law regarding the inability of licensees to
10 pledge the trust.
11 (Source: P.A. 88-477; 89-615, eff. 8-9-96.)"; and
12 in the introductory clause of Section 10, by replacing "and
13 20" with "16, and 20 and adding Section 16.5"; and
14 in Section 10, by replacing all of Sec. 14 with the
15 following:
16 "(815 ILCS 390/14) (from Ch. 21, par. 214)
17 Sec. 14. Contract required.
18 (a) It is unlawful for any seller doing business within
19 this State to accept sales proceeds, either directly or
20 indirectly by any means, unless the seller enters into a
21 pre-need sales contract with the purchaser which meets the
22 following requirements:
23 (1) A written sales contract shall be executed in
24 duplicate for each pre-need sale made by a licensee, and
25 a signed copy given to the purchaser. Each completed
26 contract shall be numbered and shall contain the name and
27 address of the purchaser and the seller, the name of the
28 person, if known, who is to receive the cemetery
29 merchandise, cemetery services or the completed
30 interment, entombment or inurnment spaces under the
31 contract and specifically identify such merchandise,
32 services or spaces.
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1 (2) In addition, such contracts must contain a
2 provision in distinguishing typeface substantially as
3 follows follow:
4 "Notwithstanding anything in this contract to the
5 contrary, you are afforded certain specific rights of
6 cancellation and refund under Sections 18 and 19 of the
7 Illinois Pre-Need Cemetery Sales Act, enacted by the 84th
8 General Assembly of the State of Illinois".
9 (3) All pre-need sales contracts shall be sold on a
10 guaranteed price basis. At the time of performance of the
11 service or delivery of the merchandise, the seller shall
12 be prohibited from assessing the purchaser or his heirs
13 or assigns or duly authorized representative any
14 additional charges for the specific merchandise and
15 services listed on the pre-need sales contract.
16 Each contract shall clearly disclose that the price of
17 the merchandise or services is guaranteed and shall contain
18 the following statement in 12 point bold type:
19 "THIS CONTRACT GUARANTEES THE BENEFICIARY THE SPECIFIC
20 GOODS AND SERVICES CONTRACTED FOR. NO ADDITIONAL CHARGES
21 MAY BE REQUIRED. FOR DESIGNATED GOODS AND SERVICES,
22 ADDITIONAL CHARGES MAY BE INCURRED FOR UNEXPECTED EXPENSES."
23 (b) Every pre-need sales contract must be in writing,
24 and no pre-need sales contract form may be used unless it has
25 previously been filed with the Comptroller. The Comptroller
26 shall review all pre-need sales contract forms and, upon
27 written notification to the seller, shall prohibit the use of
28 contract forms that do not meet the requirements of this Act.
29 Any use or attempted use of any oral pre-need sales contract
30 or any written pre-need sales contract in a form not filed
31 with the Comptroller or in a form that does not meet the
32 requirements of this Act shall be deemed a violation of this
33 Act. The Comptroller may by rule develop a model pre-need
34 sales contract form that meets the requirements of this Act.
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1 (c) To the extent the Rule is applicable, every pre-need
2 sales contract is subject to the Federal Trade Commission
3 Rule concerning the Cooling-Off Period for Door-to-Door Sales
4 (16 CFR Part 429).
5 (Source: P.A. 85-805.)"; and
6 in Section 10, after the last line of Sec. 15, buy inserting
7 the following:
8 "(815 ILCS 390/16) (from Ch. 21, par. 216)
9 Sec. 16. Trust funds; disbursements.
10 (a) A trustee shall make no disbursements from the trust
11 fund except as provided in this Act.
12 (b) A trustee shall, with respect to the investment of
13 such trust funds, exercise the judgment and care under the
14 circumstances then prevailing which persons of prudence,
15 discretion and intelligence exercise in the management of
16 their own affairs, not in regard to speculation, but in
17 regard to the permanent disposition of their funds,
18 considering the probable income as well as the probable
19 safety of their capital.
20 The seller shall act as trustee of all amounts received
21 for cemetery merchandise, services, or undeveloped spaces
22 until those amounts have been deposited into the trust fund.
23 The seller may continue to be the trustee of up to $500,000
24 that has been deposited into the trust fund, but the seller
25 must retain an independent trustee for any amount of trust
26 funds in excess of $500,000. A seller holding trust funds in
27 excess of $500,000 on the effective date of this amendatory
28 Act of 1996 shall have 36 months to retain an independent
29 trustee for the amounts over $500,000; any other seller must
30 retain an independent trustee for its trust funds in excess
31 of $500,000 as soon as may be practical. The Comptroller
32 shall have the right to disqualify the trustee upon the same
33 grounds as for refusing to grant or revoking a license
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1 hereunder. Upon notice to the Comptroller, the seller may
2 change the trustee of the trust fund.
3 (c) The trustee may rely upon certifications and
4 affidavits made to it under the provisions of this Act, and
5 shall not be liable to any person for such reliance.
6 (d) A trustee shall be allowed to withdraw from the
7 trust funds maintained pursuant to this Act, payable solely
8 from the income earned on such trust funds, a reasonable fee
9 for all usual and customary services for the operation of the
10 trust fund, including, but not limited to trustee fees,
11 investment advisor fees, allocation fees, annual audit fees
12 and other similar fees. The maximum amount allowed to be
13 withdrawn for these fees each year shall be the lesser of 3%
14 of the balance of the trust calculated on an annual basis or
15 the amount of annual income generated therefrom.
16 (e) The trust shall be a single-purpose trust fund. In
17 the event of the seller's bankruptcy, insolvency or
18 assignment for the benefit of creditors, or an adverse
19 judgment, the trust funds shall not be available to any
20 creditor as assets of the seller or to pay any expenses of
21 any bankruptcy or similar proceeding, but shall be
22 distributed to the purchasers or managed for their benefit by
23 the trustee holding the funds. Except in an action by the
24 Comptroller to revoke a license issued pursuant to this Act
25 and for creation of a receivership as provided in this Act,
26 the trust shall not be subject to judgment, execution,
27 garnishment, attachment, or other seizure by process in
28 bankruptcy or otherwise, nor to sale, pledge, mortgage, or
29 other alienation, and shall not be assignable except as
30 approved by the Comptroller. The changes made by this
31 amendatory Act of the 91st General Assembly are intended to
32 clarify existing law regarding the inability of licensees to
33 pledge the trust.
34 (f) Because it is not known at the time of deposit or at
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1 the time that income is earned on the trust account to whom
2 the principal and the accumulated earnings will be
3 distributed, for purposes of determining the Illinois Income
4 Tax due on these trust funds, the principal and any accrued
5 earnings or losses relating to each individual account shall
6 be held in suspense until the final determination is made as
7 to whom the account shall be paid.
8 (Source: P.A. 88-477; 89-615, eff. 8-9-96.)
9 (815 ILCS 390/16.5 new)
10 Sec. 16.5. Licensee bankruptcy. In the event of a
11 licensee's bankruptcy, insolvency, or assignment for the
12 benefit of creditors, or in the event of the bankruptcy,
13 insolvency, or assignment for the benefit of creditors of any
14 person, partnership, association, corporation, or other
15 entity that possesses a controlling interest in a licensee,
16 the licensee shall provide notice in writing of that event to
17 each purchaser of a pre-need sales contract or a pre-need
18 contract within 30 days after the event of bankruptcy,
19 insolvency, or assignment for the benefit of creditors. At a
20 minimum, the notice must contain the following:
21 (1) The name and address of the licensee.
22 (2) If different from the licensee, the name and
23 address of the party that is the subject of the
24 bankruptcy, insolvency, or assignment for the benefit of
25 creditors.
26 (3) A brief description of the event of bankruptcy,
27 insolvency, or assignment for the benefit of creditors.
28 (4) The case name or other identifying title of any
29 matter pending in any court, federal or State, pertaining
30 to the bankruptcy, insolvency, or assignment for the
31 benefit of creditors.
32 (5) The name and address of the court in which the
33 bankruptcy, insolvency, or assignment for the benefit of
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1 creditors is pending.
2 (6) A description of any action the purchaser must
3 undertake to file a claim or to protect the purchaser's
4 interests, including the purchaser's right to a refund
5 under this Act."; and
6 in Section 10, Sec. 20, by replacing all of subsection (e)
7 with the following:
8 "(e) On and after the effective date of this amendatory
9 Act of the 91st General Assembly, a licensee may report all
10 required information concerning the sale of outer burial
11 containers on the licensee's annual report required to be
12 filed under this Act and shall not be required to report that
13 information under the Illinois Funeral or Burial Funds Act,
14 as long as the information is reported under this Act."; and
15 by replacing all of Section 99 with the following:
16 "Section 99. Effective date. This Act takes effect upon
17 becoming law, except that the changes to Section 1 of the
18 Funeral or Burial Funds Act and the changes to Sections 4,
19 14, 15, and 20 of the Pre-Need Cemetery Sales Act take effect
20 on January 1, 2000.".