1998 Minnesota Statutes

     149A.97 Preneed arrangements. 

    Subdivision 1.    Purpose and intent.  It is the intent 
 of the legislature that this section be construed as a 
 limitation upon the manner in which a funeral provider 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 final disposition of 
 human remains. It is further intended to allow members of the 
 public to arrange and pay for funerals, funeral services, 
 funeral or burial goods, or final dispositions 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. 

    Subd. 2.    Scope and requirements.  This section shall 
 not apply to any funeral goods purchased and delivered, either 
 at purchase or within a commercially reasonable amount of time 
 thereafter.  When prior to the death of any person, that person 
 or another, on behalf of that person, enters into any 
 transaction, makes a contract, or any series or combination of 
 transactions or contracts with a funeral provider lawfully doing 
 business in Minnesota, other than an insurance company licensed 
 to do business in Minnesota selling approved insurance or 
 annuity products, by the terms of which, goods or services 
 related to the final disposition of that person will be 
 furnished at-need, 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.  The person for whose benefit the 
 money was paid shall be known as the beneficiary, the person or 
 persons who paid the money shall be known as the purchaser, and 
 the funeral provider shall be known as the depositor. 

    Subd. 3.    Nature of trust.  Except as provided in this 
 section, nothing in this section shall abate the rights, duties, 
 and powers granted under chapters 501B and 520.  A trust created 
 for the holding of preneed arrangement funds shall be revocable, 
 in its entirety, unless specifically limited by the person 
 purchasing the preneed funeral goods and or services.  If the 
 purchaser chooses to limit the revocability of the trust funds, 
 the limitation must be declared in the trust instrument and must 
 be limited to an amount equivalent to the allowable supplemental 
 security income asset exclusion used for determining eligibility 
 for public assistance at the time the trust is created.  

    Subd. 4.    Freedom of choice; designation of trustee.  
 The purchaser, regardless of whether the funds held in trust are 
 designated revocable or irrevocable, retains the right to 
 designate the trustee.  At any time prior to the death of the 
 beneficiary, the purchaser may designate a different trustee. 
 Upon the death of the beneficiary, subject to section 149A.80, 
 the rights of the purchaser vest in the individual with the 
 legal right to control the disposition of the remains of the 
 beneficiary.  The depositor as trustee shall not have the right 
 or power to designate another trustee prior to the death of the 
 beneficiary or subsequent to such death. 

    Subd. 5.    Deposit of trust funds and disclosures.  
 Within 15 calendar days after receipt of any money required to 
 be held in trust, all of the money must be deposited in a 
 banking institution, savings or building and loan association, 
 or credit union, organized under state or federal laws, the 
 accounts of which are insured by an instrumentality of the 
 federal government.  The money must be carried in a separate 
 account with the name of the depositor and the purchaser as 
 trustees for the beneficiary.  The depositor as trustee shall 
 not have power to distribute funds, either principal or 
 interest, from the account until the death of the beneficiary, 
 subject to section 149A.80.  For purposes of this section, 
 distribute does not mean transferring the trust funds to 
 different investment accounts within an institution or between 
 institutions provided that the depositor as trustee does not 
 have sole access to the funds in a negotiable form.  This 
 section shall be construed to limit the depositor's access to 
 trust funds, in a negotiable form, prior to the death of a 
 beneficiary.  The preneed arrangements trust shall be considered 
 an asset of the purchaser until the death of the beneficiary, 
 whereupon the money shall be considered an asset of the estate 
 of the beneficiary, to the extent that the value of the trust 
 exceeds the actual value for the goods and services provided 
 at-need.  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, must be disclosed in 
 writing to the beneficiary by the depositor as trustee at the 
 time the money is deposited and when there are any subsequent 
 changes to the location of the trust account. 

    Subd. 6.    Disbursement of trust funds.  The funds held 
 in trust, including principal and accrued interest, may be 
 distributed prior to the death of the beneficiary upon demand by 
 the purchaser to the extent that the trust is designated 
 revocable.  At the death of the beneficiary and with 
 satisfactory proof of death provided to the institution holding 
 the trust funds, the funds, including principal and accrued 
 interest, may be distributed by either the depositor as trustee 
 or the purchaser as trustee, subject to section 149A.80.  The 
 funds shall be distributed in their entirety, with no fees to be 
 retained by the trustees as administrative fees.  The funds 
 shall be distributed for the payment of the actual at-need value 
 of the funeral goods and/or services selected with any excess 
 funds distributed to the estate of the decedent. 

    Subd. 7.    Reports to commissioner.  Every funeral 
 provider lawfully doing business in Minnesota that accepts funds 
 under subdivision 2 must make a complete annual report to the 
 commissioner.  The reports may be on forms provided by the 
 commissioner or substantially similar forms containing, at 
 least, identification and the state of each trust account, 
 including all transactions involving principal and accrued 
 interest, and must be filed by March 31 of the calendar year 
 following the reporting year along with a filing fee of $15 for 
 each report.  Fees shall be paid to the treasurer, state of 
 Minnesota, for deposit in the state government special revenue 
 fund in the state treasury.  Reports must be signed by an 
 authorized representative of the funeral provider and notarized 
 under oath.  All reports to the commissioner shall be reviewed 
 for account inaccuracies or possible violations of this 
 section.  If the commissioner has a reasonable belief to suspect 
 that there are account irregularities or possible violations of 
 this section, the commissioner shall report that belief, in a 
 timely manner, to the state auditor.  The commissioner shall 
 also file an annual letter with the state auditor disclosing 
 whether or not any irregularities or possible violations were 
 detected in review of the annual trust fund reports filed by the 
 funeral providers.  This letter shall be filed with the state 
 auditor by May 31 of the calendar year following the reporting 
 year. 

    Subd. 8.    Investigations by state auditor.  Upon 
 notification from the county auditor or the commissioner of 
 health of indications of violations of this chapter, or upon 
 reliable written verification by any person, 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 any examinations of accounts and records 
 of the entity that the state auditor considers the public 
 interest to demand and shall inform the appropriate agency of 
 any finding of misconduct.  The state auditor may require the 
 entity being examined to send all books, accounts, and vouchers 
 pertaining to the receipt, disbursement, and custody of funds to 
 the office of the state auditor for examination.  The person, 
 firm, partnership, association, or corporation examined under 
 this section by the state auditor shall reimburse the state 
 auditor for expenses incurred in conducting the examination 
 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. 9.    Required records.  Every funeral provider 
 lawfully doing business in Minnesota that accepts funds under 
 subdivision 2 must create and maintain on its premises or other 
 business location in Minnesota an accurate record of every trust 
 fund established with the funeral provider as trustee.  The 
 record must contain the following information: 

    (1) the names of the purchaser, beneficiary, and depositor; 

    (2) the date, location, identifying account numbers, and 
 amount of the funds originally deposited; 

    (3) any subsequent changes to the location of the account, 
 identifying account number, or trustee designation; 

    (4) the date, amount, and payee of any distributions from 
 the account; and 

    (5) all supporting documentation, including a copy of the 
 original trust agreement, copies of any contracts for the 
 purchase of preneed funeral goods and services, and any other 
 appropriate documentation. 

    Subd. 10.    Retention of records.  Records required 
 under subdivision 9 shall be maintained for a period of three 
 calendar years after the release of the trust funds.  Following 
 this period and subject to any other laws requiring retention of 
 records, the funeral provider may then place the records in 
 storage or reduce them to microfilm, microfiche, laser disc, or 
 any other method that can produce an accurate reproduction of 
 the original record, for retention for a period of ten calendar 
 years from the date of release of the trust funds.  At the end 
 of this period and subject to any other laws requiring retention 
 of records, the funeral provider may destroy the records by 
 shredding, incineration, or any other manner that protects the 
 privacy of the individuals identified. 

    Subd. 11.    Report data.  Data on individuals collected 
 and maintained under subdivision 7 are private data on 
 individuals as defined in section 13.02, subdivision 12.  
 Section 13.10 applies to data on decedents collected under 
 subdivision 7. 

    Subd. 12.    Penalties.  Any violation of this section 
 is grounds for disciplinary action pursuant to sections 149A.04 
 to 149A.10. 

    HIST: 1997 c 215 s 43