N.Y. General Business Law § 453: Moneys paid in connection with agreements for funeral merchandise or services in advance of need to be kept on deposit pending use or rep...

§ 453. Moneys paid in connection with agreements for funeral

merchandise or services in advance of need to be kept on deposit pending

use or repayment. 1. (a) Any and all moneys paid to a funeral firm,

funeral director, undertaker, cemetery, or any other person, firm or

corporation, under or in connection with an agreement, or any option to

enter into an agreement, for the sale of merchandise to be used in

connection with a funeral or burial, or for the furnishing of personal

services of a funeral director or undertaker, wherein the merchandise is

not to be actually physically delivered or the personal services are not

to be rendered until the occurrence of the death of the person for whose

funeral or burial such merchandise or services are to be furnished shall

continue to be the money of the person making such payment and shall be

held in trust for such person by the funeral firm, funeral director,

undertaker, cemetery or any other person, firm or corporation to whom

such payment is made and shall, within ten business days of receipt, be

deposited in an interest bearing account in a bank, national bank,

federal savings bank, federal savings and loan association, savings

bank, savings and loan association, credit union, or federal credit

union within the state and duly authorized to receive deposits in the

state of New York and which shall earn interest at a rate which shall be

at not less than the prevailing rate of interest earned by other such

deposits in such banks, savings banks, savings and loan associations, or

credit unions under this section, or shall be placed in a trust company

in an investment backed by the government of the United States and shall

not be commingled with other moneys of the funeral firm, funeral

director, undertaker, cemetery, or other person, firm or corporation or

become the funds of the funeral firm, funeral director, undertaker,

cemetery, or other person, firm or corporation, and shall be so held on

deposit, together with any interest thereon with interest earned being

accrued daily and credited monthly, until said merchandise has been

actually physically delivered and said personal services have been

rendered, unless sooner repaid, in whole or in part. No funeral firm,

funeral director, undertaker, cemetery or any other person, firm or

corporation, shall discharge the obligation established under this

section to deposit or place money with a bank, national bank, federal

savings bank, federal savings and loan association, savings bank,

savings and loan association, credit union, federal credit union or

trust company within the state through a surety bond or other financial

instrument unless expressly provided under this section.

(b) Such funeral firm, funeral director, undertaker, cemetery, or

other person, firm or corporation which received such moneys shall,

within thirty business days after the deposit or any change in the

institution in which such funds are deposited, provide written

notification to the person who made such payment of the institution of

the deposit and, until such moneys have been repaid or the personal

services and merchandise have been provided, shall annually provide the

person who made such payment with a statement identifying the location

and annual interest earned by the account.

(c) Upon request of the person who made such payment, or his or her

representative, the funeral firm, funeral director, undertaker, cemetery

or other person, firm or corporation which received such moneys shall

provide a statement within thirty days of such request identifying the

location of the account, amount of such account and interest earned on

such account. Upon the provision of any merchandise or personal services

in connection with any such agreement, the funeral firm, funeral

director, undertaker, cemetery or other person, firm or corporation

which received such moneys shall provide a statement itemizing the

merchandise or personal services provided and the cost of such

merchandise or personal services and describing the disposition of all

moneys in the account. Copies of such statements and the records on

which they are based shall be made available for inspection and shall be

made available during ordinary business hours for copying upon written

request by any state agency regulating the funeral firm, funeral

director, undertaker, cemetery or other person, firm or corporation

which received such money or enforcing the requirements of this section,

provided a complaint, either oral or written, has been received, or an

inspector has grounds to believe that serious or repeat violations of

this section have occurred.

(d) Moneys paid for such an agreement for an applicant or recipient of

supplemental security income benefits under section two hundred nine of

the social services law or of medical assistance under section three

hundred sixty-six of such law, or moneys paid by such an applicant or

recipient for such an agreement for his or her family member, shall be

placed into a trust which shall be irrevocable but under which such

applicant/recipient reserves the right to select any funeral firm,

funeral director, undertaker, cemetery or any other person, firm or

corporation to whom such payment is made and to change such selection

any time to any type of funeral or any funeral firm, funeral director,

cemetery or any other person, firm or corporation to whom such payment

is made, located in the state of New York or any other state. Any such

change must be carried out within ten business days following receipt of

a request by the purchaser to the funeral firm, funeral director,

cemetery or any other person, firm or corporation to whom such payment

is made, with which such trust was established. This requirement is

subject to any limits set forth in federal law or regulation pertaining

to disregarded resources or income.

2. The amount of any and all moneys paid under or in connection with

such an agreement, together with interest, if any, accrued thereon while

on deposit as so required shall be repaid on demand at any time prior to

the delivery of the merchandise and/or the rendering of the personal

services. No administrative, consultation or other fee may be assessed

against the person making such payment in connection with or planning

for such agreement. Provided, however, neither the applicant, recipient

or other purchaser of preneed funeral goods or services through an

irrevocable trust, their legal representative nor the heirs of such

person, shall be entitled to any repayment of the moneys which created

such trust.

3. Any such agreement must be in writing and must:

(a) Identify all moneys paid or to be paid; and

(b) Identify any fees paid to the person administering such trust fund

by a third party, provided, however, any such fees shall not exceed

seventy-five hundredths of one percent of the amount of such trust fund;

and

(c) Except for an irrevocable trust established pursuant to section

two hundred nine of the social services law or paragraph (d) of

subdivision one of this section, notify the person making such payment

of his or her right to be repaid moneys paid, together with accrued

interest, as described in this section and of his or her right to

receive an annual statement; and

(d) Identify the provider of each service or item of merchandise to

the extent agreed upon, and fully describe the service or merchandise to

the extent agreed upon; and

(e) Describe the obligations of each party:

(i) in the event the service or merchandise described in the agreement

cannot, for reasons beyond the control of the parties, be provided when

needed;

(ii) in the event the cost of such services or merchandise, when such

services or merchandise is to be provided, exceeds the amount of the

moneys paid and accrued interest; and

(iii) in the event the amount of the moneys paid and accrued interest

exceeds the cost of such services or merchandise when they are to be

provided. If the agreement does not provide to the contrary, the

services or merchandise described in the agreement must be provided for

no more than the price stated therein. Except for an irrevocable trust

established pursuant to section two hundred nine of the social services

law or paragraph (d) of subdivision one of this section, any moneys in

excess of the amount set forth in the agreement must be repaid to the

person who made the payment or to the estate of such person. The

agreement must also specify the name and address of a person not living

at the address of the person who made payments under or in connection

with the agreement, to whom required notices may be sent if the person

who made payments under or in connection with the agreement cannot be

contacted. The person making such payments may decline in writing to

specify the name and address of a person not living at the address of

the person making such payments to whom such notice may be sent; and

(f) With respect to an agreement for an irrevocable trust fund

pursuant to section two hundred nine of the social services law or

paragraph (d) of subdivision one of this section, include the following

statement in the agreement in conspicuous print of at least twelve point

type:

DISCLOSURE

NEW YORK LAW REQUIRES THIS AGREEMENT TO BE IRREVOCABLE FOR APPLICANTS

FOR AND RECIPIENTS OF SUPPLEMENTAL SECURITY BENEFITS UNDER SECTION TWO

HUNDRED NINE OF THE SOCIAL SERVICES LAW OR OF MEDICAL ASSISTANCE UNDER

SECTION THREE HUNDRED SIXTY-SIX OF THE SOCIAL SERVICES LAW, AND FOR THE

MONEYS PUT INTO A TRUST UNDER THIS AGREEMENT TO BE USED ONLY FOR FUNERAL

AND BURIAL EXPENSES. WHETHER THE AGREEMENT IS FOR YOUR FUNERAL AND

BURIAL EXPENSES OR FOR THOSE OF A FAMILY MEMBER, IF ANY MONEY IS LEFT

OVER AFTER YOUR FUNERAL AND BURIAL EXPENSES HAVE BEEN PAID, IT WILL GO

TO THE COUNTY. YOU MAY CHANGE YOUR CHOICE OF FUNERAL HOME AT ANY TIME.

IF THIS AGREEMENT IS FOR THE FUNERAL AND BURIAL EXPENSES OF A FAMILY

MEMBER, AFTER YOUR DEATH SUCH FAMILY MEMBER MAY CHANGE THE CHOICE OF

FUNERAL HOME AT ANY TIME.

(g) Any promotional literature prepared after January first, nineteen

hundred ninety-seven by a funeral firm, funeral director, undertaker,

cemetery, or any other person, firm or corporation for prearranged

funeral and burial services must contain language disclosing the

irrevocable nature of burial trusts established by or for an applicant

or recipient of supplemental security income benefits or medical

assistance.

4. Any provision of any such agreement whereby a person who pays money

under or in connection therewith waives any provision of this section

shall be void.

5. (a) Upon the sale or transfer of any business, firm, corporation or

other entity having received moneys in connection with such agreements

or the transfer of control over such money, both the new owner and

former owner or the estate of the former owner, or both the persons

currently and formerly having control over such money, shall, within

thirty days of such sale or transfer, notify, in writing, each such

person who has paid moneys of the sale or transfer, including the name

and address of the new and former owner. Copies of such notification

shall be made available for inspection and shall be made available

during ordinary business hours for copying upon written request by any

official or agency having jurisdiction.

(b) Upon the sale or other transfer of any business, firm, corporation

or other entity having received moneys in connection with such

agreements or upon any transfer of control over such moneys, the

transferee shall be liable for compliance with all provisions of this

section including the repayment of any moneys and provision of funeral

merchandise and services, and for compliance with all other requirements

of this section if the transferor or a transferor's predecessor in

interest was liable for such compliance with the requirements of this

section. Such liability shall attach whether or not the successor in

interest has, upon conveyance of such business, firm, corporation or

other entity, received such moneys or has knowledge of the existence of

the agreement as herein described. Such liability shall attach where

there is proof of a valid agreement for providing funeral merchandise

and services, and the funeral director, undertaker, cemetery or other

person, firm or corporation has not refunded the moneys received from

the customer.

(c) Upon the sale or other transfer of any business, firm, corporation

or other entity having received such moneys, or upon a transfer of

control of such moneys, the transferor shall disclose a complete

accounting of all moneys transferred pursuant to such agreement to the

transferee, including the names and addresses of all persons who

deposited moneys with such business, firm, corporation or other entity,

the amount and location of such moneys, the names and addresses of

persons who have received refunds and the amount of such refund.

(d) Upon the termination, cessation of operation or discontinuance of

any business, firm, corporation or other entity which has received

moneys in connection with such agreements or is otherwise liable for

compliance with the requirements of this section, such business, firm,

corporation or other entity shall repay all such monies and accrued

interest as if a demand had been made therefor within thirty days of

such termination or discontinuation. Copies of records relating to the

repayment of such moneys shall be available for inspection and shall be

made available during ordinary business hours for copying upon written

request by the appropriate official or agency having jurisdiction.

6. Any person, firm or corporation who or which, having received any

moneys under or in connection with such an agreement, shall knowingly

and willfully fail to deposit or keep such moneys on deposit shall be

guilty of a misdemeanor or, shall knowingly and willfully fail to

provide the notification required pursuant to subdivision five of this

section shall be guilty of a violation. Any person, firm or corporation

who or which, having received any moneys under or in connection with

such an agreement, or who or which is deemed responsible for such moneys

pursuant to subdivision five of this section shall, without lawful

reason, knowingly and willfully fail to repay, upon demand, any and all

such moneys as provided in this section, or shall knowingly and

willfully misappropriate such money for a use not authorized in this

section, shall, in addition to any other penalties provided by law, be

guilty of a misdemeanor.

7. Whenever there shall be a violation of this section an application

may be made by the attorney general in the name of the people of the

state of New York to a court or justice having jurisdiction by a special

proceeding to issue an injunction, and upon notice to the defendant of

not less than five days, to enjoin and restrain the continuance of such

violation; and if it shall appear to the satisfaction of the court or

justice that the defendant has, in fact, violated this section, an

injunction may be issued by the court or justice, enjoining and

restraining any further violations, without requiring proof that any

person has, in fact, been injured or damaged thereby. In any such

proceeding, the court may make allowances to the attorney general as

provided in paragraph six of subdivision (a) of section eighty-three

hundred three of the civil practice law and rules, and direct

restitution. Whenever the court shall determine that a violation of this

section has occurred, the court may impose a civil penalty of not more

than one thousand dollars for each violation; provided, however, the

court shall not impose a civil penalty in any case where the department

of health has imposed such a penalty for an identical violation of the

provisions of the public health law. In connection with any such

proposed application the attorney general is authorized to take proof

and make a determination of the relevant facts and to issue subpoenas in

accordance with the civil practice law and rules, and direct

restitution.

8. Records required by this section to be maintained and true copies

of agreements shall be retained for four years following the provisions

of funeral merchandise and services or, if a preneed administrator, for

four years after final payment is disbursed pursuant to the agreement.

In the event the funds are returned to the person who deposited the

money or their representative, such records, including the record of

return of funds shall be retained for a period of four years after the

sale, transfer, termination, cessation of operation or discontinuance of

the funeral. For purposes of this section, records shall include, but

not be limited to, a copy of the agreement, a death certificate and a

copy of the check or other payment made pursuant to the agreement.

Copies of such records shall be made available for inspection and shall

be made available during ordinary business hours for copying upon

written request by any state agency regulating the funeral firm, funeral

director, undertaker, cemetery or other person, firm or corporation

which received such money or enforcing the requirements of this section,

provided a complaint, either oral or written, has been received, or an

inspector has grounds to believe that serious or repeat violations of

this section have occurred.

9. This section shall not apply to the sale of lots or graves by a

cemetery.

10. For the purposes of this section, "preneed administrator" means

any person, partnership, firm, limited liability company or corporation,

which is either domiciled in or doing business in the state of New York,

and which has received money under or in connection with an agreement

executed pursuant to this section; and "county" shall refer only to a

county located within the state of New York. For the purposes of

subdivision five of this section, "preneed administrator" shall also

include any successor, assignee or transferee of funds held pursuant to

this section.

11. Notwithstanding any other provision of law to the contrary, the

following provisions shall be applicable to each preneed administrator

of written preneed accounts, both revocable and irrevocable:

(a) The assets of such an account shall be deemed abandoned as of the

later of (i) three years after the date of death of the person for whose

funeral or burial such assets were to be used; or (ii) one year after

the preneed administrator has determined that the person for whose

funeral or burial such assets were to be used has died if such death

occurred less than two years prior to such determination. The preneed

administrator shall make reasonable attempts to determine if the person

for whose funeral or burial such assets were to be used has died, using

available information from federal and state sources. Upon the death of

a person for whose funeral or burial such merchandise or services are to

be furnished, the preneed administrator shall determine the name and

address of the funeral director who performed the funeral services. If

the preneed administrator determines that the funeral director has been

paid in full for the funeral services, and if the account is

irrevocable, the preneed administrator shall, on or before the tenth day

of March in each year, transfer the assets of such account to the

indigent care burial fund for the county in which the person for whose

funeral or burial such assets were to be used resided at the date of his

or her death. If the preneed administrator determines that the funeral

director has been paid in full for the funeral services, and if the

account is revocable, the preneed administrator shall, on or before the

tenth day of March in each year, pay or deliver to the state comptroller

pursuant to section one thousand three hundred fifteen of the abandoned

property law, the assets of such account which was deemed to have been

abandoned as of the thirty-first day of December of such calendar year.

(1) Upon the death of a person for whose funeral or burial such

merchandise or services are to be furnished, if the preneed

administrator determines that the funeral director has not been paid in

full for the funeral services, the preneed administrator shall pay the

funeral director for the funeral services upon receipt of the required

documentation for paying claims for funeral services. If the balance due

is more than the cost of the funeral services, the preneed administrator

shall transfer the remaining balance, if an irrevocable account, to the

indigent care burial fund as provided in this paragraph, or, if a

revocable account, to the state comptroller as provided in this

paragraph.

(2) Upon the death of a person for whose funeral or burial such

merchandise or services are to be furnished, and with reasonable

efforts, the preneed administrator cannot determine the name and address

of the funeral director who provided the funeral services, the preneed

administrator, if the account was irrevocable, shall transfer the assets

of such account to the indigent care burial fund for the county in which

the person for whose funeral or burial such merchandise or services are

to be furnished resided at the time the irrevocable account was

established, such transfer to be made as described in this paragraph.

The preneed administrator, if the account was revocable, shall pay or

deliver the assets of such account to the state comptroller, such

transfer to be made as described in this paragraph.

(b) If the preneed administrator is not able to determine a current

proper address of an account for the person for whose funeral or burial

such merchandise or services are to be furnished such that the annual

statements mailed regarding the account are returned to the preneed

administrator as undeliverable, and such administrator cannot, after

making reasonable efforts, determine a current and proper address for

the person for whose funeral or burial such merchandise or services are

to be furnished, the account shall be deemed dormant if (i) the preneed

administrator has not been able to determine a correct address for the

person for whose funeral or burial such merchandise or services are to

be furnished for a period of fifteen consecutive years, and (ii) based

upon the information contained in the written agreement the preneed

administrator can determine that, if the person for whose funeral or

burial such merchandise or services are to be furnished were then

living, the person for whose funeral or burial such merchandise or

services are to be furnished would have reached the age of one hundred

fifteen years.

(1) If the account is deemed dormant as defined in this paragraph, the

preneed administrator shall transfer the assets of such account, if it

is an irrevocable account, to the indigent care burial fund for the

county in which the person for whose funeral or burial such merchandise

or services are to be furnished resided at the time the irrevocable

account was established. The administrator shall transfer the assets of

such account, if it is a revocable account, to the state comptroller as

provided in paragraph (a) of this subdivision.

(2) Nothing contained in this subdivision shall prevent a person for

whose funeral or burial such merchandise or services are to be

furnished, if an irrevocable account, or a funeral home which provided

funeral services to the person for whose funeral or burial such

merchandise or services are to be furnished, or a person who has paid

for funeral services for which an irrevocable account was established,

from requesting and receiving the lesser of (i) the actual cost or

amount paid for the funeral, or (ii) the amount transferred to the

indigent burial fund, in the event that the person for whose funeral or

burial such merchandise or services are to be furnished is living, or

that the funeral services for the person for whose funeral or burial

such merchandise or services are to be furnished were not paid in full,

or that a person has paid for funeral services for which an irrevocable

account was established. Nothing contained in this subdivision shall

prevent a person otherwise authorized by law to seek reimbursement of

the funds from a revocable account pursuant to the applicable provisions

of the abandoned property law.

12. A preneed administrator operating under this section shall conduct

an audit of all of its accounts relating to preneed agreements as of the

thirty-first of December of each calendar year. The audit shall:

(a) Be performed by a certified public accountant licensed to practice

in New York state;

(b) Be completed and delivered to the preneed administrator within one

hundred twenty days of the end of such calendar year;

(c) Verify, by way of a representative sample, that the preneed

administrator has a signed copy of the agreement for each account;

(d) Verify, by way of a representative sample, that appropriate income

tax reports have been sent by the preneed administrator to the owner of

each account;

(e) Verify that the investment of all funds for the agreements is in

compliance with this section;

(f) Verify, by an appropriate sampling method, that the earnings on

the investments are being properly applied to each account and that the

earnings are credited to each account at least monthly;

(g) Express an opinion that the financial statements of the preneed

administrator fairly represent the financial condition of the funds

received in all material respects, and that all financial information

distributed by the preneed administrator to consumers, funeral homes or

other parties is accurate; and

(h) Verify that the stated yield credited to the account for that

fiscal year, as announced by the preneed administrator, is accurate.

13. (a) In no event shall the administrative fees charged under a

preneed agreement in any calendar year exceed the net income credited to

an account for such calendar year; that is, the account balance shall

never be reduced in any calendar year because of administrative fees

charged against the account.

(b) Any administrative fees otherwise payable in relation to preneed

agreements which are not paid in any calendar year because of the

limitations in paragraph (a) of this subdivision shall not be collected

in any subsequent calendar year.

14. A preneed administrator operating under this section shall, at the

end of each calendar year, have all assets valued and presented in

accordance with generally accepted accounting principles.