Minnesota Session Laws - 1988, Regular Session

  

                         Laws of Minnesota 1988 

                        CHAPTER 509-S.F.No. 1867 
           An act relating to cemeteries; mausoleums, prearranged 
          funeral services; consumer protection; requiring the 
          establishment of a construction performance bond; 
          requiring a permanent care account for any mausoleum;  
          providing reporting requirements; broadening the 
          powers of the county auditors and state auditor; 
          amending Minnesota Statutes 1986, sections 149.11; 
          149.13; 306.03; 306.04; 306.37; 306.761; 306.77; and 
          306.773, subdivision 1; proposing coding for new law 
          in Minnesota Statutes, chapter 306. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 149.11, is 
amended to read:  
    149.11 [PREARRANGED FUNERAL PLANS; CONTRACTS; TRUST FUNDS.] 
    (a) When prior to the death of any person, that person or 
another enters into any transaction, makes a contract, or any 
series or combination of transactions or contracts with another 
person, partnership, association or corporation, other than an 
insurance company licensed to do business in the state of 
Minnesota, by the terms of which, certain personal property 
related to the funeral services or the burial, cremation, or 
other disposition of human remains will be used upon the death 
of the person for whom the property is to be used, or when the 
professional services of a funeral director or embalmer will 
then be furnished, or both, then the total of all money paid by 
the terms of the transaction, contract or series or combination 
of transactions or contracts shall be held in trust for the 
purpose for which it has been paid until the death of the person 
for whose benefit the money was paid, or refunded to the person 
who made the payment or payments, upon demand.  Accruals of 
interest or dividends declared upon the sum of money held in 
trust are subject to the same trust.  The person, partnership, 
association or corporation holding the money in trust shall 
inform the person on whose behalf the money is held that all 
money paid plus all accrued earnings will be held in trust until 
the death of that person or until a request for a refund is made 
if made prior to death.  The location of the trust account 
including the name and address of the institution in which the 
money is being held and any identifying account numbers, and any 
subsequent changes in that information must be disclosed in 
writing to the person on whose behalf the money is being held, 
at the time the funds are deposited into the trust account and 
at the time of any subsequent changes in the information.  The 
personal property shall include but not be limited to a casket, 
burial vault not interred in a grave, combination casket-vault 
or other receptacle not described in paragraph (b) for the 
internment, entombment, cremation, or other disposition of human 
remains.  
    (b) Nothing in this section shall prevent the sale and 
delivery of cemetery lots, graves, burial vaults preinterred in 
a grave, cremation urns, crypt spaces, niches, columbaria, or 
grave or lot markers or monuments before their use is required. 
Nothing in this section prevents the preconstruction sale of 
crypt spaces to be permanently installed except that any seller 
of mausoleum space or columbarium space, selling burial space in 
a mausoleum or columbarium that is not completely constructed 
and usable, must comply with section 10.  
    (c) It is the intent of the legislature that the provisions 
of this section shall be construed as a limitation upon the 
manner in which a person or legal entity is permitted to accept 
funds in prepayment of funeral services to be performed in the 
future or in prepayment of funeral or burial goods to be used in 
connection with the funeral or final disposition of human 
remains.  It is further intended to allow members of the public 
to arrange and pay for funerals, final dispositions, funeral 
services, and funeral and burial goods for themselves and their 
families in advance of need while at the same time providing all 
possible safeguards so that the prepaid funds cannot be 
dissipated, whether intentionally or not, so as to be available 
for the payment of the services and goods selected. 
    Sec. 2.  Minnesota Statutes 1986, section 149.13, is 
amended to read:  
    149.13 [REPORTS.] 
    Subdivision 1.  If a banking institution, a savings, 
building and loan association or a credit union receives money 
in trust, under section 149.12, it shall report the amount 
received and held in trust to the probate court of the county 
wherein the cestui que trust resides, within 30 days 
thereafter.  This report shall show the name and address of each 
trustee and cestui que trust, the principal amount remaining, 
and the current interest rate applicable to the account.  
    Every funeral establishment which is subject to the trust 
requirement in section 149.11 and is licensed by the 
commissioner of health to practice embalming or funeral 
directoring must make a complete annual report to the 
commissioner of health, disclosing the state of the trust fund 
including all deposits and withdrawals of principal amounts and 
all receipts and disbursements.  The report shall be filed on 
forms prescribed by the state auditor by March 31.  The report 
shall be signed and notarized under oath.  There shall be paid 
to the commissioner of health a filing fee of $15 for each 
report.  The state commissioner of health shall review these 
reports for indications of violations of this chapter. 
    Subd. 2.  Any person, firm, partnership, association, or 
corporation which is subject to the trust requirement in section 
149.11, but which is not licensed by the commissioner of health 
to practice embalming or funeral directoring, must make a 
complete written annual report to the county auditor of the 
county in which the establishment operates.  If the 
establishment is located outside of Minnesota, the report must 
be filed with the Minnesota county auditor in the county in 
which the funeral services or personal property is to be 
delivered.  The report must disclose the state of the fund, 
including all deposits and withdrawals of principal amounts and 
receipts and disbursements.  The report shall be filed on forms 
prescribed by the state auditor by March 31 for any person, 
firm, partnership, association, or corporation operating on a 
calendar year basis and by 90 days after the end of the fiscal 
year for any person, firm, partnership, association, or 
corporation operating on a fiscal year basis.  The report shall 
be signed and notarized under oath.  There shall be paid to the 
county auditor a filing fee of $15 for each report.  The county 
auditor shall review these reports for indications of violations 
of this chapter. 
    Subd. 3.  Any person, firm, partnership, association, or 
corporation subject to subdivision 1 or 2 when changing the 
trustee must file a notice of change of trustee of the trust 
fund.  If subdivision 1 applies, the trustee change must be 
filed with the commissioner of health 30 days after the change 
of trustee.  If subdivision 2 applies, the trustee change must 
be filed with the county auditor 30 days after the change of 
trustee.  
    Subd. 4.  The county auditor and the commissioner of health 
must, if they have reason to believe violations of this chapter 
may exist, report that belief to the state auditor in a timely 
manner.  Every county auditor and the commissioner of health 
must also file an annual letter by May 31 with the state 
auditor's office disclosing whether they have detected any 
indications of violations of this chapter.  If the county 
auditor or commissioner of health has not detected, from the 
information supplied to them, indications of violations of this 
chapter, that fact must be reported to the state auditor in the 
annual letter.  
    Subd. 5.  Upon notification from the county auditor or the 
commissioner of health of indications of violations of this 
chapter, the state auditor shall make an independent 
determination of whether a violation of the provisions in this 
chapter is occurring, or is about to occur.  If the state 
auditor finds such evidence, the state auditor shall conduct an 
independent audit of the entity in accordance with generally 
accepted auditing standards and shall inform the appropriate 
agency of any finding of misconduct.  The person, firm, 
partnership, association, or corporation audited under this 
section by the state auditor shall reimburse the state auditor 
for expenses incurred in conducting the audit within 30 days 
after the state auditor submits its expenses.  Interest at the 
rate established in section 549.09 shall accrue on the 
outstanding balance starting on the 31st day after the state 
auditor's office submits its request for expenses.  
    Subd. 6.  Any person, firm, partnership, association, or 
corporation required to hold money in trust under section 149.11 
must retain records within Minnesota until three years after the 
death of the person for whose benefit the money was paid or the 
money is refunded or delivery occurs pursuant to section 
149.11.  The records must state on whose behalf the money is 
held, the location of the money, including any identifying 
numbers, and the name and address of the institution in which 
the money is held. 
    Subd. 7.  Unless the data is summary data, data on 
individuals collected and maintained under this section is 
private data on individuals and shall not be disclosed except:  
(1) pursuant to court order; or (2) for law enforcement 
purposes.  Individual is defined as in section 13.02, 
subdivision 8. 
    Subd. 8.  Any person, firm, partnership, association, or 
corporation knowingly violating the provisions of this section 
shall be guilty of a misdemeanor and for a second offense shall 
be guilty of a gross misdemeanor. 
    Sec. 3.  Minnesota Statutes 1986, section 306.03, is 
amended to read:  
    306.03 [ACTUARY; RECORDS; REPORTS.] 
    Every such corporation, including any person, firm, 
partnership, association, or corporation owning or operating a 
mausoleum or columbarium, in addition to its ordinary corporate 
officers, shall annually appoint an actuary, or provide by its 
bylaws that its secretary shall perform the duties of such 
office.  The actuary shall keep a register of burials, entering 
the date of burial, entombment, or cremation, the name, age, 
sex, nativity, and cause of death of every person interred or 
cremated in such cemetery, so far as such facts can be 
ascertained from the friends, attending physician, or undertaker 
in charge, and in case of a pauper, stranger, or criminal, from 
the public official directing the burial.  Such record shall be 
open to public inspection, and the actuary shall furnish to the 
state commissioner of health and to local health officers, when 
so requested, an accurate summary of such record during any 
specified year. 
    Sec. 4.  Minnesota Statutes 1986, section 306.04, is 
amended to read:  
    306.04 [FAILURE TO KEEP REGISTER; FORFEITURE.] 
    Every actuary, or secretary performing the duties of an 
actuary, failing to keep such register of burials and to record 
therein all interments and cremations, for every such offense 
shall forfeit not less than $2 nor more than $10 for the benefit 
of the school fund of the district in which such cemetery, 
mausoleum, or crematory is situated.  
    Sec. 5.  Minnesota Statutes 1986, section 306.37, is 
amended to read:  
    306.37 [CARE AND IMPROVEMENT FUND.] 
    Subdivision 1.  Twenty percent of the proceeds of all sales 
of cemetery lots and ten percent of the proceeds of all sales of 
burial space in a mausoleum or columbarium made after the vote 
of the board of trustees of the association to establish said 
care and improvement fund shall be paid over to such trustee or 
trustees of the fund, on January 1, April 1, July 1, and October 
1, in each year.  Until so paid over, the foregoing amounts 
shall be held in trust by the cemetery association for payment 
thereof to the trustee or trustees of such fund.  "Proceeds" 
includes any installment payment made towards the purchase of a 
cemetery lot or burial space in a mausoleum or columbarium.  
     Subd. 2.  Any other income or funds of the association, in 
excess of its liabilities, may be added to such fund by a 
two-thirds vote of the members of its board of trustees.  The 
principal of such fund shall not be subject to any minimum or 
maximum amount.  
     Subd. 3.  The words "cemetery lots" as used in this section 
shall not be construed to include burial space in a mausoleum or 
columbarium.  The term "burial space" as used herein shall 
include private rooms, crypts, niches or other designated space 
in which the bodies or ashes cremated remains of deceased 
persons are placed for permanent burial in a mausoleum or 
columbarium.  
    Subd. 4.  Any person, firm, partnership, association, or 
corporation knowingly violating the provisions of this section 
shall be guilty of a misdemeanor and for a second offense shall 
be guilty of a gross misdemeanor. 
    Sec. 6.  Minnesota Statutes 1986, section 306.761, is 
amended to read:  
    306.761 [PERMANENT CARE AND IMPROVEMENT FUNDS; MINIMUM 
AMOUNTS; REPORTING; PENALTIES.] 
    Subdivision 1.  Any cemetery association which operates a 
cemetery larger than ten acres shall establish a permanent care 
and improvement fund and all cemetery associations operating a 
cemetery larger than ten acres and having a permanent care and 
improvement fund shall file annually as part of the report 
required in subdivision 2 a notice with the county auditor of 
the county in which the cemetery is situated.  The notice shall 
include the names and addresses of each person or entity owning 
a five percent or greater interest in the cemetery, and the 
names and addresses of all officers if any change has taken 
place since the previous notice.  The term "association" as used 
in this section shall include any person, firm, partnership, 
association or corporation. 
    Subd. 2.  Any cemetery association which operates a 
cemetery larger than ten acres and having any person, firm, 
partnership, association, or corporation owning or operating a 
mausoleum or columbarium, or constructing or selling space in a 
mausoleum or columbarium to be built, which has a permanent care 
and improvement fund shall make a full and complete written 
annual report to the county auditor of the county in which the 
cemetery or mausoleum or columbarium or future site of the 
mausoleum or columbarium is situated on the condition and state 
of the fund, including all deposits and withdrawals of principal 
amounts and all receipts and disbursements.  The report shall be 
filed on forms prescribed by the county state auditor by March 
31 for any cemetery association operating a cemetery larger than 
ten acres and operating entity described in this subdivision 
which operates on a calendar year basis and by 90 days after the 
end of the fiscal year for any cemetery association operating a 
cemetery larger than ten acres and operating entity described in 
this subdivision which operates on a fiscal year basis.  The 
report shall be signed and notarized under oath.  There shall be 
paid to the county auditor a filing fee of $10 $15 for each 
report. 
    Subd. 3.  Any person, firm, partnership, association, or 
corporation holding money in trust under this section shall 
provide notice to the person purchasing the cemetery lot, or the 
burial space in a mausoleum or columbarium, at the time of the 
first payment.  The notice shall be in writing, and shall 
identify the location where the money will be held in trust 
including any identifying account numbers and the name and 
address of the institution in which the money is held.  Any 
person, firm, partnership, association, or corporation holding 
money in trust under this section shall notify the county 
auditor receiving the annual report if there is a change in the 
identifying account numbers or location of the fund within seven 
days of the change.  
    Subd. 4.  Any person, firm, partnership, association, or 
corporation subject to this section must file a notice of change 
of trustee of any trust funds with the same county auditor who 
should receive the annual report required by this section within 
30 days after the change of trustees. 
    Subd. 5.  Any person, firm, partnership, association, or 
corporation knowingly violating the provisions of this section 
shall be guilty of a misdemeanor and for a second offense shall 
be guilty of a gross misdemeanor.  
    Subd. 4 6.  This section shall not apply to cemeteries, 
mausoleums, or columbariums owned and operated by a 
municipality, church, religious corporation or religious 
association. 
     Sec. 7.  [306.762] [PERMANENT RETENTION OF RECORDS.] 
    Subdivision 1.  Any cemetery association and any person, 
firm, partnership, association, and corporation owning or 
operating a mausoleum or columbarium, or constructing or selling 
space in a mausoleum or columbarium to be built, required to 
deposit trust money in a permanent care and improvement fund 
must, in Minnesota, permanently retain records of the trust 
account.  The records of the trust account must include the name 
of the person purchasing the cemetery lot or burial space, the 
name of the living representative of that person if one was 
designated, and the location of the money including any 
identifying numbers and the name and address of the institution 
in which the money is held.  
     Subd. 2.  Any person, firm, partnership, association, or 
corporation knowingly violating the provisions of this section 
shall be guilty of a misdemeanor and for a second offense shall 
be guilty of a gross misdemeanor. 
     Subd. 3.  This section shall not apply to cemeteries, 
mausoleums, or columbariums owned and operated by a 
municipality, church, religious corporation, or religious 
association. 
    Sec. 8.  Minnesota Statutes 1986, section 306.77, is 
amended to read:  
    306.77 [FUNDS, IN CARE OF TRUST COMPANY.] 
    The board of trustees of any such association shall, by a 
resolution adopted by a vote of at least two-thirds of its 
members, designate and appoint one or more trust companies 
organized under the laws of this state, or a board consisting of 
at least three individuals, to act as trustee or trustees of 
such fund.  In case more than one trust company shall at any 
time be so designated and appointed, the board of trustees 
shall, from time to time, apportion all moneys available for the 
fund between these trust companies in such proportion as such 
board by vote may direct or determine.  This designation and 
appointment shall be evidenced by a written instrument duly 
executed by the proper officers of the association under its 
corporate seal.  Each trust company and individual so designated 
and appointed shall qualify as such trustee by filing written 
acceptance of such designation and appointment with the 
secretary of the association.  All instruments of designation 
and appointment, and any revocation of the same, and the written 
acceptances shall be recorded at length by the secretary of the 
association in its corporate records.  The appointment of any 
such trustee may be revoked by the board of trustees of the 
association at any time by a vote of two-thirds of its members.  
No trustee of such fund shall be liable as such except for 
neglect or willful default in the discharge of duties. 
     Seven days before any portion of the principal of a 
permanent care and improvement fund is transferred or withdrawn 
from its present location, the board of trustees must, in 
writing, notify the county auditor of such activity and of the 
destination of the funds.  Any person, firm, partnership, 
association, or corporation knowingly violating the provisions 
of this section shall be guilty of a misdemeanor and for a 
second offense shall be guilty of a gross misdemeanor. 
    Sec. 9.  Minnesota Statutes 1986, section 306.773, 
subdivision 1, is amended to read:  
    Subdivision 1.  Every cemetery association heretofore or 
hereafter organized under the laws of this state which has 
provided for a permanent care and improvement fund administered 
by one or more trust companies acting as trustee or trustees of 
such fund, pursuant to the provisions of section 306.77, may, 
when the principal of such fund remaining after withdrawals 
therefrom for purposes authorized by law shall have reached an 
amount exceeding $100,000 $350,000, by resolution adopted by a 
vote of at least two-thirds of the members of its board of 
trustees at any authorized meeting of the board, authorize the 
trust company or trust companies acting as such trustee or 
trustees, in investing, reinvesting, exchanging, and managing 
such fund, to acquire every kind of investment, specifically 
including, but not by way of limitation, bonds, debentures, and 
other corporate obligations, and corporate stocks, which any 
ordinarily prudent person of discretion and intelligence, who is 
a trustee of the property of others, would acquire as such 
trustee.  
     Sec. 10.  [306.90] [CONSTRUCTION PERFORMANCE BOND.] 
     Subdivision 1.  Any person, firm, partnership, association, 
or corporation selling burial space in a mausoleum or 
columbarium before the mausoleum or columbarium is completed and 
usable shall obtain a performance bond in an amount sufficient 
to cover all construction costs associated with building the 
mausoleum or columbarium as promised at the time of sale.  The 
bond shall be executed by an insurance company authorized to do 
business in Minnesota which has sufficient net worth to satisfy 
the amount of the bond and which has given consent to be sued in 
Minnesota. 
     Subd. 2.  The bond shall be in favor of the state for the 
benefit of any purchaser who suffers a loss due to failure of 
the seller to deliver the promised structure.  Any person 
claiming against the bond may file a claim with the surety, and 
if the claim is not paid, may maintain an action based on the 
bond and recover against the surety.  The attorney general may 
file a claim with the surety on behalf of any purchaser.  The 
surety shall pay the amount of the claims to the attorney 
general for distribution to the claimants entitled to 
restitution and shall be relieved of liability to that extent.  
If the claim is not paid, the attorney general may maintain an 
action against the surety on behalf of the claimants. 
    Subd. 3.  The aggregate liability of the surety to all 
persons buying space in the mausoleum or columbarium shall not 
exceed the amount of the bond. 
    Subd. 4.  Any person, firm, partnership, association, or 
corporation selling burial space in a mausoleum or columbarium 
before the mausoleum or columbarium is completed and usable 
shall file a copy of the performance bond with the county 
auditor of the county in which the mausoleum or columbarium will 
be built 30 days before the entity may sell space and begin 
construction.  There shall be paid to the county auditor a 
filing fee of $15 for each copy of the bond. 
    Subd. 5.  Any person, firm, partnership, association, or 
corporation which has begun selling burial space in a mausoleum 
or columbarium before the mausoleum or columbarium is complete 
and usable as promised at time of sale, and before the effective 
date of this section, shall file a copy of the performance bond 
30 days after the effective date of this section or cease all 
sales.  The performance bond must meet the criteria in this 
section except that if the structure is partially completed, the 
bond must cover only the remaining construction costs necessary 
to complete the structure as promised at time of sale.  There 
shall be paid to the county auditor a filing fee of $15 for each 
copy of the bond. 
     Subd. 6.  This section shall not apply to cemeteries, 
mausoleums, or columbariums owned and operated by a 
municipality, church, religious corporation, or religious 
association. 
     Subd. 7.  Any person, firm, partnership, association, or 
corporation knowingly violating the provisions of this section 
shall be guilty of a misdemeanor and for a second offense shall 
be guilty of a gross misdemeanor.  
     Sec. 11.  [306.93] [CERTIFIED LETTER.] 
     Subdivision 1.  Any person, firm, partnership, association, 
or corporation which is subject to section 306.761 is required 
to file, by March 31 if operating on a calendar year basis and 
by 90 days after the end of the fiscal year if operating on a 
fiscal year basis, either its independently audited financial 
statement or a certified letter prepared by a certified public 
accountant which reviews the permanent care and improvement fund 
and construction performance bond of the cemetery, mausoleum, or 
columbarium.  The letter or audited financial statement must, at 
a minimum, review whether the amounts in the entity's permanent 
care and improvement fund and construction performance bond 
comply with the requirements of this chapter.  The independently 
audited financial statement or the certified letter must be 
filed with the county auditor of the county in which the 
cemetery, mausoleum, or columbarium is situated.  There shall be 
paid to the county auditor a filing fee of $15 for each 
certified letter or independently audited financial statement. 
     Subd. 2.  Any person, firm, partnership, association, or 
corporation knowingly violating the provisions of this section 
shall be guilty of a misdemeanor and for a second offense shall 
be guilty of a gross misdemeanor. 
     Sec. 12.  [306.95] [DUTIES OF THE COUNTY AUDITOR.] 
     Subdivision 1.  Any county auditor finding evidence of 
violations of this chapter when reviewing reports or bonds filed 
by any person, firm, partnership, association, or corporation 
operating a cemetery, mausoleum, or columbarium must notify the 
state auditor's office in a timely manner of such finding. 
    Subd. 2.  Every county auditor must file an annual letter 
by May 31 with the state auditor's office disclosing whether the 
county auditor has detected any indications of violations of 
this chapter in the reports or bonds which were filed or should 
have been filed.  If the county auditor has not detected from 
the information supplied to the county auditor any such 
indications, that fact must be reported to the state auditor in 
the annual letter. 
     Sec. 13.  [306.97] [DUTIES OF THE STATE AUDITOR.] 
     Upon notification from a county auditor of indications of 
violations of this chapter the state auditor shall make an 
independent determination of whether a violation of the 
provisions in this chapter is occurring or is about to occur, 
and in those instances in which the state auditor finds such 
evidence the state auditor shall conduct an independent audit of 
the cemetery, mausoleum, or columbarium in accordance with 
generally accepted auditing standards and shall inform the 
appropriate agency of any finding of misconduct.  The person, 
firm, partnership, association, or corporation audited under 
this section by the state auditor shall reimburse the state 
auditor for expenses incurred in conducting the audit within 30 
days after the state auditor's office submits its expenses.  
Interest at the rate established in section 549.09 shall accrue 
on the outstanding balance starting on the 31st day after the 
state auditor demands expenses. 
    Approved April 13, 1988