N.Y. Not-for-Profit Corporation Law § 1507: Trust funds

§ 1507. Trust funds.

(a) Maintenance and preservation; permanent maintenance fund; current

maintenance fund. Subject to rules and regulations of the cemetery

board: (1) Every cemetery corporation shall maintain and preserve the

cemetery, including all lots, plots and parts thereof. For the sole

purpose of such maintenance and preservation, every cemetery corporation

shall establish and maintain (A) a permanent maintenance fund, and (B) a

current maintenance fund. At the time of making the sale of a lot, plot

or part thereof, the cemetery corporation shall deposit not less than

ten per centum of the gross proceeds of the sale into the permanent

maintenance fund. An additional fifteen per centum of the gross proceeds

of the sale shall be deposited in the current maintenance fund. In

addition to the foregoing, at the time the cemetery corporation receives

payment for the performance of an interment or inurnment, the cemetery

corporation shall collect and deposit into the permanent maintenance

fund the sum of thirty-five dollars. (2) The permanent maintenance fund

is hereby declared to be and shall be held by the corporation as a trust

fund, for the purpose of maintaining and preserving the cemetery,

including all lots, crypts, niches, plots, and parts thereof. The

principal of such fund shall be invested in such securities as are

permitted for the investment of trust funds by section 11-2.3 of the

estates, powers and trusts law. The income in the form of interest and

ordinary dividends therefrom shall be used solely for the maintenance

and preservation of the cemetery grounds. In addition, in any year, the

governing board of a qualified corporation, as defined below, may

appropriate for expenditure solely for the maintenance and preservation

of the cemetery grounds, and treat as income for all purposes, an amount

of trust principal equal to the excess, if any, of a percentage of the

fair market value of the principal of the trust, as of the last day of

the cemetery's immediately preceding fiscal year, as is prudent under

the standard established by article five-A of this chapter, the prudent

management of institutional funds act over interest and ordinary

dividends received in such year; provided, however, that an

appropriation of an amount (the safe harbor amount) of trust principal

equal to the excess of up to four percent of the fair market value of

the principal of the trust, as of the last day of the cemetery's

immediately preceding fiscal year over interest and ordinary dividends

received in such year shall be deemed to be prudent in all events. A

"qualified corporation" means a cemetery corporation which adopts a

written investment policy setting forth guidelines on investments and

delegation of management and investment functions in accord with the

standards of article five-A of this chapter. If a cemetery corporation

seeks to appropriate any percentage of the principal of the permanent

maintenance fund in accordance with this subparagraph, the cemetery

corporation shall provide notice of such proposed appropriation and

provide a copy of its written investment policy by certified mail to the

cemetery board not less than sixty days in advance of such proposed

appropriation and shall disclose such appropriation as part of and in

addition to their annual reporting requirements as defined in section

fifteen hundred eight of this article, setting forth the amount of

principal to be appropriated for such expenditure and its effect on the

permanent maintenance fund. Such proposed appropriation shall become

effective sixty days after receipt of such notice, unless the proposed

appropriation exceeds the safe harbor amount or the written investment

policy is not provided or is not prepared in accordance with the

standards of article five-A of this chapter, and the cemetery board

within such sixty-day period notifies the cemetery corporation that the

board objects to the proposed appropriation. Except to the extent that

principal is utilized as the result of the foregoing, all principal of

the permanent maintenance fund shall remain inviolate, with the further

exception that, upon application to the supreme court in a district

where a portion of the cemetery grounds is located, the court may make

an order permitting the principal or a part thereof to be used for the

purpose of current maintenance and preservation of the cemetery or

otherwise. Such application may be made by the cemetery board on notice

to the corporation or by the corporation on notice to the cemetery

board. Unless the cemetery can clearly demonstrate that it lacks

sufficient future revenue to make repayment, any such allowance from the

permanent maintenance fund shall be in the form of a loan, and the court

shall determine the method for repayment of such a loan by the cemetery

to the fund. If the cemetery clearly demonstrates it lacks sufficient

future revenue to make repayment such allowance from the permanent

maintenance fund shall be in the form of a grant that the cemetery is

not required to repay into its permanent maintenance fund. A cemetery,

including a surviving cemetery following a merger or consolidated

cemetery following a consolidation, may seek a modification of the

method of repayment, or conversion of a loan to a grant, if the cemetery

can clearly demonstrate that the cemetery merged or consolidated into

the surviving cemetery will not produce sufficient future revenue to

make repayment under the existing loan. (3) The current maintenance

fund shall be used and applied for the sole purpose of ordinary and

necessary expenses of the care and maintenance of the cemetery. When all

burial rights in the cemetery have been conveyed, the fund remaining on

deposit or to the credit of the current maintenance fund shall be

transferred into the permanent maintenance fund. (4) The percentage of

the proceeds of sales required to be deposited in the permanent

maintenance fund or current maintenance fund by a particular cemetery

corporation may be increased or diminished by order of the supreme court

in a district where any portion of the cemetery is located. Such

application may be made by the cemetery board on notice to the

corporation or by the corporation on notice to the cemetery board.

(b) Perpetual care of lots. (1) Upon the application of a prospective

purchaser of any lot, plot or part thereof and upon payment of the

purchase price and the amount fixed as a reasonable charge for the

perpetual care of any lot, plot or part thereof, every cemetery

corporation shall include with the deed of conveyance an agreement

perpetually to care for such lot, plot, or part thereof, to the extent

that the income derived by the corporation from such amount will permit.

(2) Such corporation also, upon the application of an owner or of the

executor or administrator of a deceased owner of any lot and upon the

payment of the amount fixed as a reasonable charge for the perpetual

care of such lot, shall, and upon the application of any other person

and the payment of such amount, may enter into a like agreement with

him. Such agreement shall be executed and may be recorded in the same

manner as a deed. (3) Any corporation organized under or subject to the

provisions of this section may enter into an agreement in writing with

any executor or executors, trustee or trustees, under a last will and

testament to whom there has heretofore been, or may hereafter be,

bequeathed a sum for the perpetual care of any lot, plot or part thereof

in any such cemetery or with any administrator or administrators with

the will annexed under any such will perpetually to care for such lot,

plot or part thereof under the provisions of the terms of such last will

and testament, and subject in all cases to the approval of the

surrogate's court having jurisdiction over such trust estate. Such

approval may be evidenced by the written endorsement of the surrogate on

a duplicate original of such agreement filed in the surrogate's court.

In case the surrogate shall approve such agreement any such executor,

trustee or administrator with the will annexed thereupon shall pay over

to the treasurer of such perpetual care fund of such cemetery

corporation any moneys remaining or being in his hands belonging to such

trust, and upon making such payment and accounting therefore to the

surrogate's court may be discharged from said trust as such executor,

trustee or administrator with the will annexed.

(c) Perpetual care fund. (1) Every cemetery corporation and every

religious corporation having charge and control of a cemetery which

heretofore has been or which hereafter may be used for burials, shall

keep separate and apart from its other funds, all moneys and property

received by it, whether by contract, in trust or otherwise, for the

perpetual care and maintenance of any lot, plot or part thereof in its

cemetery, and all such moneys or property so received by any such

corporation are hereby declared to be, and shall be held by the

corporation as trust funds. Any moneys and property so received, unless

otherwise provided in the instrument under which such moneys or property

were received, shall be kept in a separate fund to be known as the

perpetual care fund. (2) The principal of such funds, whether kept in

the perpetual care fund or otherwise, and unless already so invested

when received, shall be invested within a reasonable time after receipt

thereof, and kept invested, in such securities as are permitted for the

investment of trust funds by sections 11-2.2 and 11-2.3 of the estates,

powers and trusts law. The income arising therefrom shall be used solely

for the perpetual care and maintenance of the lot or plots or parts

thereof for which such income has been provided. In addition, in any

year, the governing board of a qualified corporation, as defined below,

may appropriate for expenditure solely for the maintenance and

preservation of the cemetery grounds, and treat as income for all

purposes, an amount of trust principal equal to the excess, if any, of a

percentage of the fair market value of the principal of the trust, as of

the last day of the cemetery's immediately preceding fiscal year, as is

prudent under the standard established by article five-A of this

chapter, the prudent management of institutional funds act over interest

and ordinary dividends received in such year; provided, however, that an

appropriation of an amount (the safe harbor amount) of trust principal

equal to the excess of up to four percent of the fair market value of

the principal of the trust, as of the last day of the cemetery's

immediately preceding fiscal year over interest and ordinary dividends

received in such year shall be deemed to be prudent in all events. A

"qualified corporation" means a cemetery corporation which adopts a

written investment policy setting forth guidelines on investments and

delegation of management and investment functions in accord with the

standards of article five-A of this chapter. If a cemetery corporation

seeks to appropriate any percentage of the principal of the perpetual

care fund in accordance with this subparagraph, the cemetery corporation

shall provide notice of such proposed appropriation and provide a copy

of its written investment policy by certified mail to the cemetery board

not less than sixty days in advance of such proposed appropriation and

shall disclose such appropriation as part of and in addition to their

annual reporting requirements as defined in section fifteen hundred

eight of this article, setting forth the amount of principal to be

appropriated for such expenditure and its effect on the perpetual care

fund. Such proposed appropriation shall become effective sixty days

after receipt of such notice, unless the proposed appropriation exceeds

the safe harbor amount or the written investment policy is not provided

or is not prepared in accordance with the standards of article five-A of

this chapter, and the cemetery board within such sixty-day period

notifies the cemetery corporation that the board objects to the proposed

appropriation. (3) The corporation may, for the purpose of investing and

reinvesting such funds, add the same to any similar trust fund or funds

and apportion shares or interest to each trust fund, showing upon its

records at all times every share or interest. (4) The corporation may

accept in trust for the perpetual care of a lot, plot or part thereof in

its cemetery, property not made eligible for the investment of trust

funds under the foregoing provisions of this subdivision and may retain

such property in the form in which received, separate and apart from the

perpetual care fund, if directed so to do by the instrument under which

such property is received, so long as such property remains in the form

in which it was received; but whenever such property is sold or

otherwise disposed of, the proceeds of such sale or other disposition

shall be invested in the manner heretofore provided in this subdivision

for the investment of trust funds. The exchange of stock or evidences of

indebtedness issued by a corporation for stock or evidences of

indebtedness of the same corporation, or for stock, evidences of

indebtedness, warrants or script received as a result of merger,

consolidation or reorganization of such corporation, or the receipt of

additional stock or evidences of indebtedness of such corporation, as a

distribution by such corporation, shall not be deemed to be a

disposition of the property originally received in trust, and such

exchanged or additional property may be retained in place and stead of

the property originally received, and under the same conditions. The

corporation shall keep accurate accounts of all funds for the perpetual

care and maintenance of cemetery lots, plots or parts thereof, separate

and apart from its other funds. A copy of the record pertaining to each

such perpetual care fund shall be at all times available at the office

of the corporation during usual business hours, for inspection and copy

by any owner of an endowed lot or his representative.

(d) Perpetual care fund; allocation of income and cost of care and

maintenance. On or before the fifteenth day of March in each calendar

year the officers of every cemetery corporation shall fix and determine

that portion of the income on the investment of the principal of the

perpetual care fund during the calendar or fiscal year immediately

preceding, to be apportioned to each separate lot or part thereof for

which a perpetual care agreement has been made. The cost during such

previous calendar or fiscal year of the care of each lot or part thereof

shall be allocated and charged against the income so apportioned to it.

Any excess of the income so apportioned over and above the allocated

cost of the care and maintenance of such lot or part thereof shall be

credited to such lot or part thereof, to be used in any future years to

make up the deficiency if the income apportioned to such lot or part

thereof should, in any year since September first, nineteen hundred

forty-nine, or in any future year, fall, or have fallen, below the cost

of care thereof.

(e) Designation of fiduciary corporation by directors or trustees of

cemetery corporation to act as custodians of funds. Notwithstanding the

provisions of any other law, the directors or trustees of cemetery

corporations are hereby authorized to designate a bank or trust company

to act as custodian and trustee of any or all of the respective funds of

such cemetery corporation received by it for the perpetual care of lots

in the cemetery thereof pursuant to paragraph (b), of this section, the

permanent maintenance of such cemetery pursuant to paragraph (a) of this

section, and for special purposes pursuant to paragraph (f) of this

section. Such corporate trustee shall be designated by a resolution duly

adopted by the board of directors or trustees and approved by a justice

of the supreme court of the judicial district in which the cemetery of

said corporation is located or the cemetery board; and the directors or

trustees of such cemetery corporation may, with the approval of the

justice of the supreme court, revoke such trust, and either take over

such trust fund or name another trustee to handle the same, but if not

so revoked, such trust shall be perpetual. Any bank or trust company

accepting any such cemetery fund shall keep the same separate from all

other funds, except that it may, irrespective of any provision contained

in this article invest the same in a legal common trust fund or in

shares of a mutual trust investment company organized under the banking

law, and shall pay over the net income to the directors or trustees of

the cemetery corporation by whom it shall be expended and applied to the

purpose for which such trust fund was paid to the cemetery corporations

and accounted for in accordance with such paragraphs (a), (b) and (f) of

this section.

(e-1) Monument maintenance fund. (1) A cemetery corporation may,

subject to the approval of the cemetery board, establish and maintain a

monument maintenance fund. Such a fund is hereby declared to be and

shall be held by the cemetery corporation as a trust fund, for the

purpose of providing notice if such monuments are damaged or defaced by

an act of vandalism and for the restoration of such monuments. Two or

more cemetery corporations may establish a joint monument maintenance

fund.

(2) The principal of the fund shall be invested in securities

permitted for the investment of trust funds by sections 11-2.2 and

11-2.3 of the estates, powers and trusts law. The principal of such fund

shall remain inviolate, except that upon application to the cemetery

board, which may make an order permitting the principal or a part

thereof to be used for the purpose of restoring monuments damaged or

defaced by an act of vandalism. The income arising from such investment

shall be used solely for the costs and expenses resulting from an act of

vandalism against monuments in such cemetery.

(3) The fund shall be financed by a charge levied at the time of each

interment at a rate established by each cemetery creating such a fund,

subject to cemetery board approval pursuant to section fifteen hundred

nine of this article. Such a charge shall be levied in addition to the

approved rates for interment. The fund may also accept gifts, donations

and bequests.

(4) Each cemetery creating such a fund shall promulgate rules and

regulations to administer the fund, subject to cemetery board approval

pursuant to section fifteen hundred nine of this article. Such rules

shall include the conditions under which the income from such fund may

be properly expended.

(5) The cemetery corporation shall keep accurate accounts of all

moneys for the fund, separate and apart from its other funds.

(f) Acquisition of property for special purposes and in trust. (1) A

cemetery corporation may acquire, otherwise than by condemnation, real

or personal property, absolutely or in trust, in perpetuity or

otherwise, and shall use the same or the income therefrom in pursuance

of the terms of the instrument by which it was acquired, for the

following purposes only: (i) The improvement or embellishment, but not

the enlargement, of its cemetery; (ii) The construction, preservation or

replacement of any building, structure, fence, wall, or walk therein;

(iii) The erection, renewal or preservation of any tomb, monument,

stone, fence, wall, railing or other erection or structure on or around

its cemetery or any lot or plot therein; (iv) The planting or

cultivation of trees, grass, shrubs, flowers or plants in or about its

cemetery or any lot or plot therein; (v) The construction, operation,

maintenance, repair and replacement of a crematory or columbarium or

both in its cemetery; (vi) The care, keeping in order and embellishment

of any lot, plot or part thereof or the structures thereon, in its

cemetery, as prescribed in the instrument transferring such property to

the cemetery corporation, or by the person or persons from time to time

having possession, care and control of such lot, plot or part thereof,

as the case may be. (2) All moneys and property received by a cemetery

corporation in trust under this subdivision, unless otherwise provided

in the instrument under which such moneys or property were received and

unless already so invested when received, shall be invested within a

reasonable time after the receipt thereof, and kept invested in such

securities as are permitted for the investment of trust funds by

sections 11-2.2 and 11-2.3 of the estates, powers and trusts law. The

corporation may, for the purpose of investing and reinvesting such

funds, add the same to any similar trust fund or funds and apportion

shares or interests to each trust fund, showing upon its records at all

times every share or interest. The cemetery corporation shall maintain a

record for each such trust fund. Such record shall be at all times

available at the office of the corporation during usual business hours,

for inspection and copy by any owner of an endowed lot or his

representative.

(g) Trust for the care of burial ground. A cemetery corporation,

incorporated under or by a general or special law, may receive tangible

property, securities or funds in trust, and hold and invest the same and

apply the principal or income thereof, in accordance with the terms of

the trust, for the purpose of repairing, maintaining, improving or

embellishing a burial ground, not constituting a part of the cemetery of

such cemetery corporation, and located outside of a city of more than

one million inhabitants and within ten miles of the cemetery of the

corporation accepting such trust. The directors of such corporation, or

a majority of them and the treasurer, shall annually within sixty days

after the close of each calendar or fiscal year, make, sign and shall

file at the office of the corporation a detailed accounting and report

of such trust funds held under this subdivision and the use made of such

funds or of the income thereof for the preceding calendar or fiscal

year, which shall include among other things, properly itemized, the

securities in which the same is then invested, and any purchases, sales

or other changes made therein during the period covered by such report.

Such accounting and report shall be at all times available at the office

of the corporation, during usual business hours, for inspection and copy

by any lot owner or any contributor to such trust fund.

(h) Vandalism, abandonment and monument repair or removal. (1)

Cemeteries incorporated under this article shall contribute to a fund

created pursuant to section ninety-seven-r of the state finance law for

the maintenance of abandoned cemeteries, for the restoration of property

damaged by acts of vandalism, and for the repair or removal of monuments

or other markers not owned by the cemetery corporation that have fallen

into disrepair or dilapidation so as to create a dangerous condition.

Such fund shall be administered by a board of trustees comprised of the

secretary of state, the attorney general and the commissioner of health,

or their designees, who shall serve without additional compensation.

(2) The fund shall be financed by contributions by the cemetery

corporations of not more than five dollars ($5.00) per interment or

cremation in a manner to be determined by the New York state cemetery

board. No contributions shall be collected upon the interment of the

cremains of a deceased person where a contribution was collected upon

cremations.

(3) The moneys of the fund shall be expended equally for the

maintenance of abandoned cemeteries previously owned by a corporation

incorporated pursuant to this chapter or the membership corporations law

and the repair of cemetery vandalism damage and the repair or removal of

monuments or other markers not owned by the cemetery corporation,

provided, however, that the cemetery board may determine that

circumstances necessitate an unequal distribution due to specific needs

and may provide for such distribution. For purposes of this section, the

maintenance of abandoned cemeteries may include the ordinary and

necessary care of a cemetery, such as the construction of cemetery

fences, placement of cemetery lights, removal of grass and weeds,

demolition or restoration of any buildings or structures in disrepair,

the refilling of graves, the repair or removal of monuments or other

markers not owned by the cemetery corporation that have fallen into

disrepair or dilapidation so as to create a dangerous condition,

replacement of cemetery doors and locks, and the care of crypts, niches,

grave sites, monuments, and memorials paid for by means of the general

fund or special fund or the income applied from the permanent

maintenance fund, perpetual care fund or monument maintenance fund of

the abandoned cemetery. For the purposes of this paragraph, the term

"abandoned cemetery" may include cemeteries in imminent danger of

abandonment as determined by the New York state cemetery board.

(4) Authorization for payments by the fund for maintenance of an

abandoned cemetery shall be made by the secretary of state only upon

approval by the cemetery board of an application by a municipality or

other solvent not-for-profit cemetery corporation, or a solvent

not-for-profit cemetery corporation that merges with an abandoned

cemetery in a city pursuant to section fifteen hundred six-d of this

article, for fair and reasonable expenses required to be made by the

municipality, other solvent not-for-profit cemetery corporation for

maintenance of an abandoned cemetery, or a solvent not-for-profit

cemetery corporation that merges with an abandoned cemetery in a city

pursuant to section fifteen hundred six-d of this article; provided,

however, that the cemetery board shall not approve any such application

unless the municipality, other solvent not-for-profit cemetery

corporation, or solvent not-for-profit cemetery corporation that merges

with an abandoned cemetery in a city pursuant to section fifteen hundred

six-d of this article acknowledges that the responsibility for

restoration and future care, preservation, and maintenance of such

cemetery has been assumed by the municipality or other solvent

not-for-profit cemetery corporation, or the solvent not-for-profit

cemetery corporation that merges with an abandoned cemetery in a city

pursuant to section fifteen hundred six-d of this article. For the

purposes of this paragraph, such cemetery shall always be deemed an

abandoned cemetery.

(5) Authorization for payments by the fund for the repair of vandalism

damage shall be made by the secretary of state only on approval by the

New York state cemetery board which shall determine:

(i) that an act of vandalism to the extent described by the cemetery

corporation did take place;

(ii) that either a written report of the vandalism was filed with the

local police or sheriff's department, or, that the cemetery, upon

consent of the division, made a determination not to file the report

because the publicity generated by filing the report would have adverse

consequences for the cemetery;

(iii) that the cost of repairs is fair and reasonable; and

(iv) that the cemetery corporation has been unable to obtain funds

from the lot owner, his spouse, devisees or descendants within a

reasonable period of time nor are there adequate funds in the cemetery

corporations monument maintenance fund, if such a fund has been

established by the cemetery.

(6) Authorization for payments by the fund for the repair or removal

of monuments or other markers not owned by the cemetery corporation

shall be made by the secretary of state only on approval by the New York

state cemetery board on application by the cemetery corporation showing:

(i) that the monuments or markers are so badly out of repair or

dilapidated as to create a dangerous condition;

(ii) that the cost of remedying the condition is fair and reasonable;

(iii) that the cemetery corporation has given not less than sixty days

notice to the last known owner to repair or remove the monument or other

marker and the said owner has failed to do so within the time prescribed

in said notice.

(7) The New York state cemetery board shall promulgate rules defining

standards of maintenance, as well as what type of vandalism or out of

repair or dilapidated monuments or other markers shall qualify for

payment of repair or removal by the fund and the method and amount of

payment of contributions described in subparagraph two of this paragraph

upon the recommendation of the state cemetery board citizens advisory

council created by section fifteen hundred seven-a of this article

(State cemetery board citizens advisory council). The New York state

cemetery board shall approve or deny any application made pursuant to

this section no later than sixty days after receipt of a completed

application.

(8) Nothing contained in this paragraph is to be construed as giving a

cemetery corporation an "insurable interest" in monuments or other

embellishments on a plot, lot or part thereof, nor is it meant to imply

that the cemetery corporation has any responsibility for repairing

vandalism damage not covered by this fund, nor for repairing or removing

out of repair or dilapidated monuments or other markers not owned by the

cemetery corporation, nor shall it constitute the doing of an insurance

business.