§ 523A.103 — Reserved

Iowa § 523A.103

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 523A: CEMETERY AND FUNERAL MERCHANDISE AND FUNERAL SERVICES

Text

SUBCHAPTER II
ESTABLISHMENT OF TRUSTS —
DEPOSIT, INVESTMENT, AND
REPORTING REQUIREMENTS
523A.201 Establishment of trust funds.
Unlessproceedingundersection523A.401, 523A.402, or523A.403, asellermustestablisha
trust fund prior to advertising, selling, promoting, or offering cemetery merchandise, funeral
merchandise, funeral services, or a combination thereof in this state as follows:
1. The trust fund must be established at a financial institution.
2. If a seller agrees to furnish cemetery merchandise, funeral merchandise, funeral
services, or a combination thereof and performance or delivery may be more than one
hundred twenty days following the initial payment on the account, a minimum of eighty
percent of all payments made under a guaranteed purchase agreement or a minimum of one
hundred percent of all payments made under a nonguaranteed purchase agreement shall be
placed and remain in trust until the person for whose benefit the funds were paid dies.
3. If a purchase agreement for cemetery merchandise, funeral merchandise, funeral
services, or a combination thereof provides that payments are to be made in installments,
the seller shall deposit eighty percent of each payment made under a guaranteed purchase
agreement and one hundred percent of each payment made under a nonguaranteed
purchase agreement in the trust fund until the full amount required to be placed in trust has
been deposited. If the purchase agreement is financed with or sold to a financial institution,
the purchase agreement shall be considered paid in full and the trust requirements shall be
satisfied within fifteen days after the seller receives funds from the financial institution.
4. A seller shall not invade the trust principal for any purpose.
5. Unless a seller deposits all of each payment in a trust fund that meets the requirements
of this section and section 523A.202, the seller shall have a fidelity bond or similar insurance
5 CEMETERY AND FUNERAL MERCHANDISE AND FUNERAL SERVICES, §523A.202
in an amount of not less than fifty thousand dollars to protect against the loss of purchaser
payments not placed in trust within the time period required by this section and section
523A.202. The commissioner may require a greater amount as the commissioner determines
is necessary. If the seller changes ownership, the fidelity bond or similar insurance shall
continue in force for at least one year after the transfer of ownership.
6. Paymentsotherwisesubjecttothissectionarenotexemptmerelybecausetheyareheld
in certificates of deposit.
7. Commingling of trust funds with other funds of the seller is prohibited.
8. Interest or income earned on amounts deposited in trust shall remain in trust under
the same terms and conditions as payments made under the purchase agreement, except
that a seller may withdraw so much of the interest or income as represents the difference
between the amount needed to adjust the trust funds for inflation as set by the commissioner
based on the consumer price index and the interest or income earned during the preceding
year not to exceed fifty percent of the total interest or income on a calendar-year basis. The
early withdrawal of interest or income under this provision does not affect the purchaser’s
right to a credit of such interest or income in the event of a nonguaranteed price agreement,
cancellation, or nonperformance by such a seller.
9. The commissioner may require amendments to a trust agreement not in accord with
the provisions of this chapter.
10. If a seller voluntarily or involuntarily ceases doing business and the seller’s obligation
to provide merchandise or services has not been assumed by another seller holding a current
preneed seller’s license, all trust funds, including accrued interest or income, shall be repaid
to the purchaser within thirty days following the seller’s cessation of business. A seller
may petition the commissioner, upon a showing of good cause, for a longer period of time
for repayment. A seller shall notify the commissioner at least thirty days prior to ceasing
business.