AB 1462 Burial containers: preneed contracts. BILL NUMBER: AB 1462 AMENDED 08/16/99 BILL TEXT AMENDED IN SENATE AUGUST 16, 1999 AMENDED IN SENATE JULY 7, 1999 INTRODUCED BY Assembly Member Cox (Principal coauthor: Assembly Member Hertzberg) FEBRUARY 26, 1999 An act to amend Section 7735 of, and to add Section 17530.8 to, the Business and Professions Code, relating to burial containers. LEGISLATIVE COUNSEL'S DIGEST AB 1462, as amended, Cox. Burial containers: preneed contracts. Existing law regulates preneed contracts entered into or solicited by funeral establishments. Existing law also generally regulates advertising in the state and makes it a crime to violate those regulatory provisions. This bill would enact provisions in the advertising law regulating preneed contracts entered into or solicited by certain retail sellers of caskets, alternative containers, or outer burial containers. In doing so, it would impose a state-mandated local program by expanding the scope of existing criminal provisions. The bill would specifically state that a {- retail seller of caskets, alternative containers, or other burial containers -} {+ funeral establishment +} is not prohibited from selling {- those products -} {+ funeral merchandise +} to a buyer and contracting with the buyer to store the {- container or casket -} {+ merchandise +} , subject to certain specified conditions. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. SECTION 1. Section 7735 of the Business and Professions Code is amended to read: 7735. (a) No funeral establishment licensed under the laws of the State of California, or the agents or employees of a funeral establishment, shall enter into or solicit any preneed arrangement, contract, or plan, hereafter referred to as "contract," requiring the payment to the licensee of money or the delivery to the licensee of securities to pay for the final disposition of human remains or for funeral services or for the furnishing of personal property or funeral merchandise, wherein the use or delivery of those services, property, or merchandise is not immediately required, unless the contract requires that all money paid directly or indirectly and all securities delivered under that agreement or under any agreement collateral thereto, shall be held in trust for the purpose for which it was paid or delivered until the contract is fulfilled according to its terms. However, any payment made or securities deposited pursuant to this article shall be released upon the death of the person for whose benefit the trust was established as provided in Section 7737. The income from the corpus may be used to pay for a reasonable annual fee for administering the trust, including a trustee fee, to be determined by the program, and to establish a reserve of not to exceed 10 percent of the corpus as a revocation fee in the event of cancellation on the part of the beneficiary. None of the trust corpus shall be used for payment of any commission nor shall any of the trust corpus be used for other expenses of trust administration. {- (b) (1) Nothing in this section shall prohibit a retail seller of caskets, alternative containers, or outer burial containers from selling these products to a buyer and entering into a contract with a buyer to store the casket, alternative container, or outer burial container, provided that all of the following requirements are met: (A) The transaction involves the transfer of title to the casket, alternative container, or outer burial container from the retailer to the buyer. (B) The casket, alternative container, or outer burial container is clearly identifiable as the property of the buyer. (C) The casket, alternative container, or outer burial container is stored in a facility that is accessible to the program and appropriate to the property being stored. (D) The casket, alternative container, or outer burial container is stored in a manner that allows the program to conduct the audits required by paragraph (2). (2) The Funeral Directors and Embalmers Program within the Department of Consumer Affairs may inspect and audit the storage facilities and practices of retail sellers of caskets, alternative containers, or outer burial containers to ensure compliance with paragraph (1). -} {+ (b) Nothing in this section shall prohibit a funeral establishment from selling funeral merchandise to a buyer and entering into a contract with a buyer to store the merchandise, provided that all of the following requirements are met: (1) The transaction involves the transfer of title to the merchandise from the retailer to the buyer. (2) The merchandise is clearly identifiable as the property of the buyer. (3) The merchandise is stored in a facility that is accessible to the program and appropriate to the merchandise being stored. (4) The merchandise is stored in a manner that allows the program to conduct audits of the facility. +} SEC. 2. Section 17530.8 is added to the Business and Professions Code, to read: 17530.8. (a) No retail seller of caskets, alternative containers, or outer burial containers shall enter into or solicit any preneed arrangement, contract, or plan, hereafter referred to as "contract," requiring the payment to the retail seller of money or the delivery to the retail seller of securities to pay for a casket, alternative container, or outer burial container wherein the use or delivery does not occur for over 30 days from the date the money or securities are delivered, unless the contract requires that all money paid directly or indirectly and all securities delivered under that agreement or under any agreement collateral thereto, shall be held in trust for the purpose for which it was paid or delivered until the contract is fulfilled according to its terms. However, any payment made or securities deposited pursuant to this section shall be released upon the death of the person for whose benefit the trust was established as provided in subdivision (c). The income from the corpus of the trust may be used to pay for an annual fee for administering the trust, including a trustee fee, of not more than 4 percent of the trust balance at the end of the calendar year, and to establish a reserve of not to exceed 10 percent of the corpus as a revocation fee in the event of cancellation on the part of the beneficiary. None of the corpus of the trust shall be used for the payment of any commission nor shall any of the trust corpus be used for other expenses of trust administration. (b) For the purposes of this section: (1) "Trustee" {- mean -} {+ means +} any banking institution or trust company legally authorized and empowered by the State of California to act as trustee in the handling of trust funds. (2) "Trustor" means any person who pays the money or deposits the securities used for those preneed arrangements. (3) "Beneficiary" means the person for whom the casket, alternative container, or outer burial container is purchased. (4) "Corpus of the trust" includes all moneys paid and securities delivered pursuant to the provisions of this section. (5) "Retail seller of caskets, alternative containers, or outer burial containers" or "retail seller" means any person who provides caskets, alternative containers, or outer burial containers on a retail basis, other than a funeral establishment, a licensed cemetery authority, or a licensed crematory, when those caskets, alternative containers, or outer burial containers are not delivered as soon as payment for the caskets, alternative containers, or outer burial containers is made. (c) All securities purchased by the trustor for deposit in trust and all money received from the trustor for deposit in trust shall be placed in trust with a trustee within 30 days of their receipt by the retail seller pursuant to a trust agreement executed by the retail seller, the trustor, and the trustee. The trust agreement shall provide that the trustee shall hold the money or securities in trust for the purposes for which deposited and that the trustee {- , -} shall deliver the corpus of the trust to the retail seller upon presentation by the seller of satisfactory evidence that the retail seller has furnished the casket, {- alterative -} {+ alternative +} container, or outer burial container. The trust agreement shall further provide that at any time before the retail seller has furnished the casket, alternative container, or outer burial container provided for in the contract the trustor or the legally appointed representative may in writing demand and receive the return of the corpus of the trust, together with any income accrued in the trust, less the revocation fee provided for in subdivision (a). The delivery of the corpus of the trust and the accumulated income to the retail seller, trustor, or beneficiary pursuant to the terms of this section and the trust agreement herein referred to, shall relieve the trustee of any further liabilities with regard to that corpus or the income therefrom. (d) All preneed trust funds held by a retail seller shall be subject to an annual, independent certified financial audit. The audit shall be a matter of public record and shall be made available for public inspection. A copy of the audit shall be delivered to the district attorney for any county in which the retail seller conducts business. (e) Every retail seller shall present to the survivor of the deceased who is handling the funeral arrangements or the responsible party a copy of any preneed agreement that has been signed and paid for in full, or in part by, or on behalf of the deceased and is in the possession of the retail seller. The copy may be presented in person, by certified mail, or by facsimile transmission, as agreed upon by the survivor of the deceased or the responsible party. (f) Nothing in this section shall apply to cemetery commodities or merchandise that is delivered as soon as payment for those items is made. (g) (1) Nothing in this section shall prohibit a retail seller of caskets, alternative containers, or outer burial containers from selling these products to a buyer and entering into a contract with a buyer to store the casket, alternative container, or outer burial container, provided that all of the following requirements are met: (A) The transaction involves the transfer of title to the casket, alternative container, or outer burial container from the retailer to the buyer. (B) The casket, alternative container, or outer burial container is clearly identifiable as the property of the buyer. (C) The casket, alternative container, or outer burial container is stored in a facility that is accessible to the program and appropriate to the property being stored. (D) The casket, alternative container, or outer burial container is stored in a manner that allows the program to conduct the audits required by paragraph (2). (2) The Funeral Directors and Embalmers Program within the Department of Consumer Affairs may inspect and audit the storage facilities and practices of retail sellers of caskets, alternative containers, or outer burial containers to assure compliance with paragraph (1). SEC. 3. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution. Searching keywords: (statusam) (authorCox) (HooA)