§ 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\nmerchandise or services in advance of need to be kept on deposit pending\nuse or repayment. 1. (a) Any and all moneys paid to a funeral firm,\nfuneral director, undertaker, cemetery, or any other person, firm or\ncorporation, under or in connection with an agreement, or any option to\nenter into an agreement, for the sale of merchandise to be used in\nconnection with a funeral or burial, or for the furnishing of personal\nservices of a funeral director or undertaker, wherein the merchandise is\nnot to be actually physically delivered or the personal services are not\nto be rendered until the occurrence of the death of the person for whose\nfuneral or burial such merchandise or services are to be furnished shall\ncontinue to be the money of the person making such payment and shall be\nheld in trust for such person by the funeral firm, funeral director,\nundertaker, cemetery or any other person, firm or corporation to whom\nsuch payment is made and shall, within ten business days of receipt, be\ndeposited in an interest bearing account in a bank, national bank,\nfederal savings bank, federal savings and loan association, savings\nbank, savings and loan association, credit union, or federal credit\nunion within the state and duly authorized to receive deposits in the\nstate of New York and which shall earn interest at a rate which shall be\nat not less than the prevailing rate of interest earned by other such\ndeposits in such banks, savings banks, savings and loan associations, or\ncredit unions under this section, or shall be placed in a trust company\nin an investment backed by the government of the United States and shall\nnot be commingled with other moneys of the funeral firm, funeral\ndirector, undertaker, cemetery, or other person, firm or corporation or\nbecome the funds of the funeral firm, funeral director, undertaker,\ncemetery, or other person, firm or corporation, and shall be so held on\ndeposit, together with any interest thereon with interest earned being\naccrued daily and credited monthly, until said merchandise has been\nactually physically delivered and said personal services have been\nrendered, unless sooner repaid, in whole or in part. No funeral firm,\nfuneral director, undertaker, cemetery or any other person, firm or\ncorporation, shall discharge the obligation established under this\nsection to deposit or place money with a bank, national bank, federal\nsavings bank, federal savings and loan association, savings bank,\nsavings and loan association, credit union, federal credit union or\ntrust company within the state through a surety bond or other financial\ninstrument unless expressly provided under this section.\n (b) Such funeral firm, funeral director, undertaker, cemetery, or\nother person, firm or corporation which received such moneys shall,\nwithin thirty business days after the deposit or any change in the\ninstitution in which such funds are deposited, provide written\nnotification to the person who made such payment of the institution of\nthe deposit and, until such moneys have been repaid or the personal\nservices and merchandise have been provided, shall annually provide the\nperson who made such payment with a statement identifying the location\nand annual interest earned by the account.\n (c) Upon request of the person who made such payment, or his or her\nrepresentative, the funeral firm, funeral director, undertaker, cemetery\nor other person, firm or corporation which received such moneys shall\nprovide a statement within thirty days of such request identifying the\nlocation of the account, amount of such account and interest earned on\nsuch account. Upon the provision of any merchandise or personal services\nin connection with any such agreement, the funeral firm, funeral\ndirector, undertaker, cemetery or other person, firm or corporation\nwhich received such moneys shall provide a statement itemizing the\nmerchandise or personal services provided and the cost of such\nmerchandise or personal services and describing the disposition of all\nmoneys in the account. Copies of such statements and the records on\nwhich they are based shall be made available for inspection and shall be\nmade available during ordinary business hours for copying upon written\nrequest by any state agency regulating the funeral firm, funeral\ndirector, undertaker, cemetery or other person, firm or corporation\nwhich received such money or enforcing the requirements of this section,\nprovided a complaint, either oral or written, has been received, or an\ninspector has grounds to believe that serious or repeat violations of\nthis section have occurred.\n (d) Moneys paid for such an agreement for an applicant or recipient of\nsupplemental security income benefits under section two hundred nine of\nthe social services law or of medical assistance under section three\nhundred sixty-six of such law, or moneys paid by such an applicant or\nrecipient for such an agreement for his or her family member, shall be\nplaced into a trust which shall be irrevocable but under which such\napplicant/recipient reserves the right to select any funeral firm,\nfuneral director, undertaker, cemetery or any other person, firm or\ncorporation to whom such payment is made and to change such selection\nany time to any type of funeral or any funeral firm, funeral director,\ncemetery or any other person, firm or corporation to whom such payment\nis made, located in the state of New York or any other state. Any such\nchange must be carried out within ten business days following receipt of\na request by the purchaser to the funeral firm, funeral director,\ncemetery or any other person, firm or corporation to whom such payment\nis made, with which such trust was established. This requirement is\nsubject to any limits set forth in federal law or regulation pertaining\nto disregarded resources or income.\n 2. The amount of any and all moneys paid under or in connection with\nsuch an agreement, together with interest, if any, accrued thereon while\non deposit as so required shall be repaid on demand at any time prior to\nthe delivery of the merchandise and/or the rendering of the personal\nservices. No administrative, consultation or other fee may be assessed\nagainst the person making such payment in connection with or planning\nfor such agreement. Provided, however, neither the applicant, recipient\nor other purchaser of preneed funeral goods or services through an\nirrevocable trust, their legal representative nor the heirs of such\nperson, shall be entitled to any repayment of the moneys which created\nsuch trust.\n 3. Any such agreement must be in writing and must:\n (a) Identify all moneys paid or to be paid; and\n (b) Identify any fees paid to the person administering such trust fund\nby a third party, provided, however, any such fees shall not exceed\nseventy-five hundredths of one percent of the amount of such trust fund;\nand\n (c) Except for an irrevocable trust established pursuant to section\ntwo hundred nine of the social services law or paragraph (d) of\nsubdivision one of this section, notify the person making such payment\nof his or her right to be repaid moneys paid, together with accrued\ninterest, as described in this section and of his or her right to\nreceive an annual statement; and\n (d) Identify the provider of each service or item of merchandise to\nthe extent agreed upon, and fully describe the service or merchandise to\nthe extent agreed upon; and\n (e) Describe the obligations of each party:\n (i) in the event the service or merchandise described in the agreement\ncannot, for reasons beyond the control of the parties, be provided when\nneeded;\n (ii) in the event the cost of such services or merchandise, when such\nservices or merchandise is to be provided, exceeds the amount of the\nmoneys paid and accrued interest; and\n (iii) in the event the amount of the moneys paid and accrued interest\nexceeds the cost of such services or merchandise when they are to be\nprovided. If the agreement does not provide to the contrary, the\nservices or merchandise described in the agreement must be provided for\nno more than the price stated therein. Except for an irrevocable trust\nestablished pursuant to section two hundred nine of the social services\nlaw or paragraph (d) of subdivision one of this section, any moneys in\nexcess of the amount set forth in the agreement must be repaid to the\nperson who made the payment or to the estate of such person. The\nagreement must also specify the name and address of a person not living\nat the address of the person who made payments under or in connection\nwith the agreement, to whom required notices may be sent if the person\nwho made payments under or in connection with the agreement cannot be\ncontacted. The person making such payments may decline in writing to\nspecify the name and address of a person not living at the address of\nthe person making such payments to whom such notice may be sent; and\n (f) With respect to an agreement for an irrevocable trust fund\npursuant to section two hundred nine of the social services law or\nparagraph (d) of subdivision one of this section, include the following\nstatement in the agreement in conspicuous print of at least twelve point\ntype:\n DISCLOSURE\n NEW YORK LAW REQUIRES THIS AGREEMENT TO BE IRREVOCABLE FOR APPLICANTS\nFOR AND RECIPIENTS OF SUPPLEMENTAL SECURITY BENEFITS UNDER SECTION TWO\nHUNDRED NINE OF THE SOCIAL SERVICES LAW OR OF MEDICAL ASSISTANCE UNDER\nSECTION THREE HUNDRED SIXTY-SIX OF THE SOCIAL SERVICES LAW, AND FOR THE\nMONEYS PUT INTO A TRUST UNDER THIS AGREEMENT TO BE USED ONLY FOR FUNERAL\nAND BURIAL EXPENSES. WHETHER THE AGREEMENT IS FOR YOUR FUNERAL AND\nBURIAL EXPENSES OR FOR THOSE OF A FAMILY MEMBER, IF ANY MONEY IS LEFT\nOVER AFTER YOUR FUNERAL AND BURIAL EXPENSES HAVE BEEN PAID, IT WILL GO\nTO THE COUNTY. YOU MAY CHANGE YOUR CHOICE OF FUNERAL HOME AT ANY TIME.\nIF THIS AGREEMENT IS FOR THE FUNERAL AND BURIAL EXPENSES OF A FAMILY\nMEMBER, AFTER YOUR DEATH SUCH FAMILY MEMBER MAY CHANGE THE CHOICE OF\nFUNERAL HOME AT ANY TIME.\n (g) Any promotional literature prepared after January first, nineteen\nhundred ninety-seven by a funeral firm, funeral director, undertaker,\ncemetery, or any other person, firm or corporation for prearranged\nfuneral and burial services must contain language disclosing the\nirrevocable nature of burial trusts established by or for an applicant\nor recipient of supplemental security income benefits or medical\nassistance.\n 4. Any provision of any such agreement whereby a person who pays money\nunder or in connection therewith waives any provision of this section\nshall be void.\n 5. (a) Upon the sale or transfer of any business, firm, corporation or\nother entity having received moneys in connection with such agreements\nor the transfer of control over such money, both the new owner and\nformer owner or the estate of the former owner, or both the persons\ncurrently and formerly having control over such money, shall, within\nthirty days of such sale or transfer, notify, in writing, each such\nperson who has paid moneys of the sale or transfer, including the name\nand address of the new and former owner. Copies of such notification\nshall be made available for inspection and shall be made available\nduring ordinary business hours for copying upon written request by any\nofficial or agency having jurisdiction.\n (b) Upon the sale or other transfer of any business, firm, corporation\nor other entity having received moneys in connection with such\nagreements or upon any transfer of control over such moneys, the\ntransferee shall be liable for compliance with all provisions of this\nsection including the repayment of any moneys and provision of funeral\nmerchandise and services, and for compliance with all other requirements\nof this section if the transferor or a transferor's predecessor in\ninterest was liable for such compliance with the requirements of this\nsection. Such liability shall attach whether or not the successor in\ninterest has, upon conveyance of such business, firm, corporation or\nother entity, received such moneys or has knowledge of the existence of\nthe agreement as herein described. Such liability shall attach where\nthere is proof of a valid agreement for providing funeral merchandise\nand services, and the funeral director, undertaker, cemetery or other\nperson, firm or corporation has not refunded the moneys received from\nthe customer.\n (c) Upon the sale or other transfer of any business, firm, corporation\nor other entity having received such moneys, or upon a transfer of\ncontrol of such moneys, the transferor shall disclose a complete\naccounting of all moneys transferred pursuant to such agreement to the\ntransferee, including the names and addresses of all persons who\ndeposited moneys with such business, firm, corporation or other entity,\nthe amount and location of such moneys, the names and addresses of\npersons who have received refunds and the amount of such refund.\n (d) Upon the termination, cessation of operation or discontinuance of\nany business, firm, corporation or other entity which has received\nmoneys in connection with such agreements or is otherwise liable for\ncompliance with the requirements of this section, such business, firm,\ncorporation or other entity shall repay all such monies and accrued\ninterest as if a demand had been made therefor within thirty days of\nsuch termination or discontinuation. Copies of records relating to the\nrepayment of such moneys shall be available for inspection and shall be\nmade available during ordinary business hours for copying upon written\nrequest by the appropriate official or agency having jurisdiction.\n 6. Any person, firm or corporation who or which, having received any\nmoneys under or in connection with such an agreement, shall knowingly\nand willfully fail to deposit or keep such moneys on deposit shall be\nguilty of a misdemeanor or, shall knowingly and willfully fail to\nprovide the notification required pursuant to subdivision five of this\nsection shall be guilty of a violation. Any person, firm or corporation\nwho or which, having received any moneys under or in connection with\nsuch an agreement, or who or which is deemed responsible for such moneys\npursuant to subdivision five of this section shall, without lawful\nreason, knowingly and willfully fail to repay, upon demand, any and all\nsuch moneys as provided in this section, or shall knowingly and\nwillfully misappropriate such money for a use not authorized in this\nsection, shall, in addition to any other penalties provided by law, be\nguilty of a misdemeanor.\n 7. Whenever there shall be a violation of this section an application\nmay be made by the attorney general in the name of the people of the\nstate of New York to a court or justice having jurisdiction by a special\nproceeding to issue an injunction, and upon notice to the defendant of\nnot less than five days, to enjoin and restrain the continuance of such\nviolation; and if it shall appear to the satisfaction of the court or\njustice that the defendant has, in fact, violated this section, an\ninjunction may be issued by the court or justice, enjoining and\nrestraining any further violations, without requiring proof that any\nperson has, in fact, been injured or damaged thereby. In any such\nproceeding, the court may make allowances to the attorney general as\nprovided in paragraph six of subdivision (a) of section eighty-three\nhundred three of the civil practice law and rules, and direct\nrestitution. Whenever the court shall determine that a violation of this\nsection has occurred, the court may impose a civil penalty of not more\nthan one thousand dollars for each violation; provided, however, the\ncourt shall not impose a civil penalty in any case where the department\nof health has imposed such a penalty for an identical violation of the\nprovisions of the public health law. In connection with any such\nproposed application the attorney general is authorized to take proof\nand make a determination of the relevant facts and to issue subpoenas in\naccordance with the civil practice law and rules, and direct\nrestitution.\n 8. Records required by this section to be maintained and true copies\nof agreements shall be retained for four years following the provisions\nof funeral merchandise and services or, if a preneed administrator, for\nfour years after final payment is disbursed pursuant to the agreement.\nIn the event the funds are returned to the person who deposited the\nmoney or their representative, such records, including the record of\nreturn of funds shall be retained for a period of four years after the\nsale, transfer, termination, cessation of operation or discontinuance of\nthe funeral. For purposes of this section, records shall include, but\nnot be limited to, a copy of the agreement, a death certificate and a\ncopy of the check or other payment made pursuant to the agreement.\nCopies of such records shall be made available for inspection and shall\nbe made available during ordinary business hours for copying upon\nwritten request by any state agency regulating the funeral firm, funeral\ndirector, undertaker, cemetery or other person, firm or corporation\nwhich received such money or enforcing the requirements of this section,\nprovided a complaint, either oral or written, has been received, or an\ninspector has grounds to believe that serious or repeat violations of\nthis section have occurred.\n 9. This section shall not apply to the sale of lots or graves by a\ncemetery.\n 10. For the purposes of this section, "preneed administrator" means\nany person, partnership, firm, limited liability company or corporation,\nwhich is either domiciled in or doing business in the state of New York,\nand which has received money under or in connection with an agreement\nexecuted pursuant to this section; and "county" shall refer only to a\ncounty located within the state of New York. For the purposes of\nsubdivision five of this section, "preneed administrator" shall also\ninclude any successor, assignee or transferee of funds held pursuant to\nthis section.\n 11. Notwithstanding any other provision of law to the contrary, the\nfollowing provisions shall be applicable to each preneed administrator\nof written preneed accounts, both revocable and irrevocable:\n (a) The assets of such an account shall be deemed abandoned as of the\nlater of (i) three years after the date of death of the person for whose\nfuneral or burial such assets were to be used; or (ii) one year after\nthe preneed administrator has determined that the person for whose\nfuneral or burial such assets were to be used has died if such death\noccurred less than two years prior to such determination. The preneed\nadministrator shall make reasonable attempts to determine if the person\nfor whose funeral or burial such assets were to be used has died, using\navailable information from federal and state sources. Upon the death of\na person for whose funeral or burial such merchandise or services are to\nbe furnished, the preneed administrator shall determine the name and\naddress of the funeral director who performed the funeral services. If\nthe preneed administrator determines that the funeral director has been\npaid in full for the funeral services, and if the account is\nirrevocable, the preneed administrator shall, on or before the tenth day\nof March in each year, transfer the assets of such account to the\nindigent care burial fund for the county in which the person for whose\nfuneral or burial such assets were to be used resided at the date of his\nor her death. If the preneed administrator determines that the funeral\ndirector has been paid in full for the funeral services, and if the\naccount is revocable, the preneed administrator shall, on or before the\ntenth day of March in each year, pay or deliver to the state comptroller\npursuant to section one thousand three hundred fifteen of the abandoned\nproperty law, the assets of such account which was deemed to have been\nabandoned as of the thirty-first day of December of such calendar year.\n (1) Upon the death of a person for whose funeral or burial such\nmerchandise or services are to be furnished, if the preneed\nadministrator determines that the funeral director has not been paid in\nfull for the funeral services, the preneed administrator shall pay the\nfuneral director for the funeral services upon receipt of the required\ndocumentation for paying claims for funeral services. If the balance due\nis more than the cost of the funeral services, the preneed administrator\nshall transfer the remaining balance, if an irrevocable account, to the\nindigent care burial fund as provided in this paragraph, or, if a\nrevocable account, to the state comptroller as provided in this\nparagraph.\n (2) Upon the death of a person for whose funeral or burial such\nmerchandise or services are to be furnished, and with reasonable\nefforts, the preneed administrator cannot determine the name and address\nof the funeral director who provided the funeral services, the preneed\nadministrator, if the account was irrevocable, shall transfer the assets\nof such account to the indigent care burial fund for the county in which\nthe person for whose funeral or burial such merchandise or services are\nto be furnished resided at the time the irrevocable account was\nestablished, such transfer to be made as described in this paragraph.\nThe preneed administrator, if the account was revocable, shall pay or\ndeliver the assets of such account to the state comptroller, such\ntransfer to be made as described in this paragraph.\n (b) If the preneed administrator is not able to determine a current\nproper address of an account for the person for whose funeral or burial\nsuch merchandise or services are to be furnished such that the annual\nstatements mailed regarding the account are returned to the preneed\nadministrator as undeliverable, and such administrator cannot, after\nmaking reasonable efforts, determine a current and proper address for\nthe person for whose funeral or burial such merchandise or services are\nto be furnished, the account shall be deemed dormant if (i) the preneed\nadministrator has not been able to determine a correct address for the\nperson for whose funeral or burial such merchandise or services are to\nbe furnished for a period of fifteen consecutive years, and (ii) based\nupon the information contained in the written agreement the preneed\nadministrator can determine that, if the person for whose funeral or\nburial such merchandise or services are to be furnished were then\nliving, the person for whose funeral or burial such merchandise or\nservices are to be furnished would have reached the age of one hundred\nfifteen years.\n (1) If the account is deemed dormant as defined in this paragraph, the\npreneed administrator shall transfer the assets of such account, if it\nis an irrevocable account, to the indigent care burial fund for the\ncounty in which the person for whose funeral or burial such merchandise\nor services are to be furnished resided at the time the irrevocable\naccount was established. The administrator shall transfer the assets of\nsuch account, if it is a revocable account, to the state comptroller as\nprovided in paragraph (a) of this subdivision.\n (2) Nothing contained in this subdivision shall prevent a person for\nwhose funeral or burial such merchandise or services are to be\nfurnished, if an irrevocable account, or a funeral home which provided\nfuneral services to the person for whose funeral or burial such\nmerchandise or services are to be furnished, or a person who has paid\nfor funeral services for which an irrevocable account was established,\nfrom requesting and receiving the lesser of (i) the actual cost or\namount paid for the funeral, or (ii) the amount transferred to the\nindigent burial fund, in the event that the person for whose funeral or\nburial such merchandise or services are to be furnished is living, or\nthat the funeral services for the person for whose funeral or burial\nsuch merchandise or services are to be furnished were not paid in full,\nor that a person has paid for funeral services for which an irrevocable\naccount was established. Nothing contained in this subdivision shall\nprevent a person otherwise authorized by law to seek reimbursement of\nthe funds from a revocable account pursuant to the applicable provisions\nof the abandoned property law.\n 12. A preneed administrator operating under this section shall conduct\nan audit of all of its accounts relating to preneed agreements as of the\nthirty-first of December of each calendar year. The audit shall:\n (a) Be performed by a certified public accountant licensed to practice\nin New York state;\n (b) Be completed and delivered to the preneed administrator within one\nhundred twenty days of the end of such calendar year;\n (c) Verify, by way of a representative sample, that the preneed\nadministrator has a signed copy of the agreement for each account;\n (d) Verify, by way of a representative sample, that appropriate income\ntax reports have been sent by the preneed administrator to the owner of\neach account;\n (e) Verify that the investment of all funds for the agreements is in\ncompliance with this section;\n (f) Verify, by an appropriate sampling method, that the earnings on\nthe investments are being properly applied to each account and that the\nearnings are credited to each account at least monthly;\n (g) Express an opinion that the financial statements of the preneed\nadministrator fairly represent the financial condition of the funds\nreceived in all material respects, and that all financial information\ndistributed by the preneed administrator to consumers, funeral homes or\nother parties is accurate; and\n (h) Verify that the stated yield credited to the account for that\nfiscal year, as announced by the preneed administrator, is accurate.\n 13. (a) In no event shall the administrative fees charged under a\npreneed agreement in any calendar year exceed the net income credited to\nan account for such calendar year; that is, the account balance shall\nnever be reduced in any calendar year because of administrative fees\ncharged against the account.\n (b) Any administrative fees otherwise payable in relation to preneed\nagreements which are not paid in any calendar year because of the\nlimitations in paragraph (a) of this subdivision shall not be collected\nin any subsequent calendar year.\n 14. A preneed administrator operating under this section shall, at the\nend of each calendar year, have all assets valued and presented in\naccordance with generally accepted accounting principles.\n