1.1                          A bill for an act 
  1.2             relating to trade regulations; regulating preneed 
  1.3             funeral arrangements; amending Minnesota Statutes 
  1.4             2002, section 149A.97, subdivisions 3a, 5; proposing 
  1.5             coding for new law in Minnesota Statutes, chapter 149A.
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 2002, section 149A.97, 
  1.8   subdivision 3a, is amended to read: 
  1.9      Subd. 3a.  [REQUIREMENTS FOR PRENEED FUNERAL AGREEMENTS.] 
  1.10  It is unlawful for any person residing or doing business in this 
  1.11  state to enter a preneed funeral agreement unless the agreement: 
  1.12     (1) is written in clear, understandable language and 
  1.13  printed in a type that is easy to read in size and style; 
  1.14     (2) contains a complete, itemized description of the 
  1.15  funeral goods, funeral services, burial site goods, or burial 
  1.16  site services selected or purchased, including, when 
  1.17  appropriate, manufacturer's name, model numbers, style numbers, 
  1.18  and description of the type of material used in construction; 
  1.19     (3) discloses clearly and conspicuously whether the prices 
  1.20  of the goods and services selected are guaranteed; 
  1.21     (4) discloses that funding options for a preneed funeral 
  1.22  agreement consist of either prepayment to the funeral provider 
  1.23  or the purchase of an insurance policy; 
  1.24     (5) discloses whether the funds received from the purchaser 
  1.25  are required to be placed in a trust and, if the funds are 
  2.1   required to be placed in a trust, provides the following 
  2.2   information: 
  2.3      (i) lists the location of the trust account, including the 
  2.4   name, address, and telephone number of the institution where the 
  2.5   money will be held, the manner in which the money may be 
  2.6   invested, the extent to which the funds are subject to 
  2.7   investment risk, and any identifying account numbers, the amount 
  2.8   of money to be trusted, and the names of the trustees; and 
  2.9      (ii) advises the purchaser as to the disposition of the 
  2.10  interest any income from the trust and as to responsibility for 
  2.11  taxes owed on the interest income; 
  2.12     (6) contains the names, addresses, and telephone numbers of 
  2.13  the Minnesota Department of Health as the regulatory agency for 
  2.14  preneed trust accounts and the Minnesota Attorney General's 
  2.15  Office as the regulatory agency that handles consumer 
  2.16  complaints; 
  2.17     (7) discloses clearly and conspicuously that any person who 
  2.18  makes payment under a preneed funeral agreement may cancel the 
  2.19  agreement subject to the procedures for cancellation specified 
  2.20  in subdivision 6a; 
  2.21     (8) contains the following statement, in bold-faced type 
  2.22  and a minimum size of ten points: 
  2.23     "Within 15 calendar days after receipt of any money 
  2.24  required to be held in trust, all such money must be either:  (i)
  2.25  deposited in a banking institution, savings association, or 
  2.26  credit union, organized under state or federal laws, the 
  2.27  accounts of which are insured by an instrumentality of the 
  2.28  federal government; or (ii) invested in a manner that complies 
  2.29  with the Minnesota Prudent Investor Act, Minnesota Statutes, 
  2.30  section 501B.151, and managed by a person licensed under chapter 
  2.31  80A as an investment advisor or broker-dealer.  If trust funds 
  2.32  are invested under item (ii), the purchaser must be offered in 
  2.33  writing the option of having the funds invested under item (ii) 
  2.34  in a manner in which the principal is guaranteed.  The offer in 
  2.35  writing must describe how and by whom the principal will be 
  2.36  guaranteed. The person for whose benefit the money was paid 
  3.1   according to this agreement shall be known as the beneficiary; 
  3.2   the person or persons who paid the money shall be known as the 
  3.3   purchaser; and the funeral provider shall be known as the 
  3.4   depositor.  The money must be carried in a separate account with 
  3.5   the names of the depositor and the purchaser as trustees for the 
  3.6   beneficiary, or it may be commingled with money or investments 
  3.7   held for other trusts if the arrangement under which the money 
  3.8   or investment are commingled clearly identifies the assets of 
  3.9   each separate trust. 
  3.10     The preneed arrangement trust shall be considered an asset 
  3.11  of the purchaser until the death of the beneficiary.  At the 
  3.12  death of the beneficiary, the money in the trust shall be 
  3.13  considered an asset of the beneficiary's estate, to the extent 
  3.14  that the value of the trust exceeds the actual value for the 
  3.15  goods and services provided at-need.  This does not alter any 
  3.16  asset exclusion requirements that exist under federal law.  The 
  3.17  depositor as trustee must disclose in writing the location of 
  3.18  the trust account, including the name and address of the 
  3.19  institution where the money is being held and any identifying 
  3.20  account numbers, to the beneficiary when the money is deposited 
  3.21  and when there are any subsequent changes to the location of the 
  3.22  trust account."; 
  3.23     (9) for agreements with revocable trusts, contains the 
  3.24  following statement, in bold-faced type and a minimum size of 
  3.25  ten points: 
  3.26     "REVOCABLE TRUST: 
  3.27     The preneed arrangement trust being created by the 
  3.28  purchaser is revocable.  These trust funds, including all 
  3.29  principal and accrued interest, are the purchaser's assets.  The 
  3.30  purchaser may withdraw the principal and accrued interest at any 
  3.31  time prior to the death of the beneficiary.  At the death of the 
  3.32  beneficiary, the funds shall be distributed in their entirety, 
  3.33  principal plus accrued interest, with no fees retained by the 
  3.34  trustees as administrative fees.  The funds shall be distributed 
  3.35  for the payment of the at-need funeral goods, funeral services, 
  3.36  burial site goods, or burial site services selected, with any 
  4.1   excess funds distributed to the beneficiary's estate.  At any 
  4.2   time before or at the time of the beneficiary's death, the 
  4.3   purchaser may transfer the preneed arrangements and related 
  4.4   trust funds for use in the payment of funeral goods, funeral 
  4.5   services, burial site goods, or burial site services.  The 
  4.6   purchaser may not be charged any fee in connection with the 
  4.7   transfer of a preneed arrangement and trust funds."; 
  4.8      (10) for agreements with irrevocable trusts, contains the 
  4.9   following statement, in bold-faced type and a minimum size of 
  4.10  ten points: 
  4.11     "IRREVOCABLE TRUST: 
  4.12     A trust created to hold preneed arrangement funds is 
  4.13  revocable in its entirety unless specifically limited by the 
  4.14  purchaser.  The purchaser has chosen to create an irrevocable 
  4.15  trust in the amount of $ (insert the dollar amount of the 
  4.16  purchaser's irrevocable trust).  The revocable portion of this 
  4.17  trust fund is limited to that amount that exceeds the allowable 
  4.18  supplemental security income asset exclusion used for 
  4.19  determining eligibility for public assistance at the time the 
  4.20  trust is created.  The principal and accrued interest may not be 
  4.21  withdrawn from the trust prior to the beneficiary's death, 
  4.22  except to the extent that the trust funds exceed the irrevocable 
  4.23  trust limitation.  At the time of the beneficiary's death, the 
  4.24  funds shall be distributed in their entirety, principal plus 
  4.25  accrued interest, with no fees retained by the trustees as 
  4.26  administrative fees.  The funds shall be distributed for the 
  4.27  payment of the at-need funeral goods, funeral services, burial 
  4.28  site goods, or burial site services selected, with any excess 
  4.29  funds distributed to the beneficiary's estate.  At any time 
  4.30  prior to or at the time of the beneficiary's death, the 
  4.31  purchaser may transfer the preneed arrangements and trust funds 
  4.32  for use in the payment of funeral goods, funeral services, 
  4.33  burial site goods, or burial site services.  The purchaser may 
  4.34  not be charged any fee in connection with the transfer of a 
  4.35  preneed arrangement and trust funds."; 
  4.36     (11) provides that if the particular funeral goods, funeral 
  5.1   services, burial site goods, or burial site services specified 
  5.2   in the agreement are unavailable at the time of delivery, the 
  5.3   funeral provider must furnish goods and services similar in 
  5.4   style and at least equal in quality to the material and 
  5.5   workmanship of the goods or services specified and that the 
  5.6   representative of the beneficiary has the right to choose the 
  5.7   goods or services to be substituted; and 
  5.8      (12) contains an itemization of the sale of grave lots, 
  5.9   spaces, lawn crypts, niches, or mausoleum crypts separate from 
  5.10  all other goods and services selected. 
  5.11     Sec. 2.  Minnesota Statutes 2002, section 149A.97, 
  5.12  subdivision 5, is amended to read: 
  5.13     Subd. 5.  [DEPOSIT OF TRUST FUNDS AND DISCLOSURES.] Within 
  5.14  15 calendar days after receipt of any money required to be held 
  5.15  in trust, all of the money must be deposited in:  (1) a banking 
  5.16  institution, savings or building and loan association, or credit 
  5.17  union, organized under state or federal laws, the accounts of 
  5.18  which are insured by an instrumentality of the federal 
  5.19  government; or (2) invested in compliance with section 
  5.20  501B.151.  The money must be carried in a separate account with 
  5.21  the name of the depositor and the purchaser as trustees for the 
  5.22  beneficiary, or it may be commingled with money or investments 
  5.23  held for other trusts established under this section if the 
  5.24  arrangement under which such money or investments are commingled 
  5.25  clearly identifies the assets of each separate trust.  The 
  5.26  depositor as trustee shall not have power to distribute funds, 
  5.27  either principal or interest, from the account until the death 
  5.28  of the beneficiary, subject to section 149A.80.  For purposes of 
  5.29  this section, distribute does not mean transferring the trust 
  5.30  funds to different investment accounts within an institution or 
  5.31  between institutions provided that the depositor as trustee does 
  5.32  not have sole access to the funds in a negotiable form.  This 
  5.33  section shall be construed to limit the depositor's access to 
  5.34  trust funds, in a negotiable form, prior to the death of a 
  5.35  beneficiary.  The preneed arrangements trust shall be considered 
  5.36  an asset of the purchaser until the death of the beneficiary, 
  6.1   whereupon the money shall be considered an asset of the estate 
  6.2   of the beneficiary, to the extent that the value of the trust 
  6.3   exceeds the actual value for the goods and services provided 
  6.4   at-need.  The location of the trust account, including the name 
  6.5   and address of the institution in which the money is being held 
  6.6   and any identifying account numbers, must be disclosed in 
  6.7   writing to the beneficiary by the depositor as trustee at the 
  6.8   time the money is deposited and when there are any subsequent 
  6.9   changes to the location of the trust account.  The depositor 
  6.10  shall annually report to the beneficiary the amount of funds in 
  6.11  the beneficiary's preneed arrangement trust account, including 
  6.12  principal and accrued interest.  The depositor may arrange for 
  6.13  the banking institution, savings or building and loan 
  6.14  association, or credit union to issue such reports.  Upon the 
  6.15  provision of any funeral or burial site goods or services in 
  6.16  connection with a preneed arrangement, the depositor shall 
  6.17  provide a statement itemizing the goods or services provided and 
  6.18  cost of such goods or services and describing the disposition of 
  6.19  all funds in the account. 
  6.20     Sec. 3.  [149A.971] [TRANSIT PROVISIONS.] 
  6.21     The assets of trusts that are invested in banking 
  6.22  institutions, savings associations, or credit unions at the time 
  6.23  of the effective date of section 149A.97, subdivisions 3a and 5, 
  6.24  may be invested as otherwise permitted under section 149A.97, 
  6.25  subdivision 5, provided that 90 days' prior written notice is 
  6.26  furnished to the purchaser by the depositor or the depositor's 
  6.27  designee of the depositor's intention to so invest the assets 
  6.28  and the purchaser does not elect to direct the depositor in 
  6.29  writing within the 90-day period to refrain from making the 
  6.30  investment.