NY Gen Bus L § 453 (2021)
2021 New York Laws GBS - General Business Article 28-A - Cemetery Property and Funeral Services 453 - Moneys Paid in Connection With Agreements for Funeral Merchandise or Services in Advance of Need to Be Kept on Deposit Pending Use or Repayment.

§   453.  Moneys  paid  in  connection  with  agreements  for  funeral merchandise or services in advance of need to be kept on deposit pending use or repayment. 1. (a) Any and all moneys  paid  to  a  funeral  firm, funeral  director,  undertaker,  cemetery,  or any other person, firm or corporation, under or in connection with an agreement, or any option  to enter  into  an  agreement,  for  the  sale of merchandise to be used in connection with a funeral or burial, or for the furnishing  of  personal services of a funeral director or undertaker, wherein the merchandise is not to be actually physically delivered or the personal services are not to be rendered until the occurrence of the death of the person for whose funeral or burial such merchandise or services are to be furnished shall continue  to be the money of the person making such payment and shall be held in trust for such person by the  funeral  firm,  funeral  director, undertaker,  cemetery  or  any other person, firm or corporation to whom such payment is made and shall, within ten business days of receipt,  be deposited  in  an  interest  bearing  account  in a bank, national bank, federal savings bank, federal  savings  and  loan  association,  savings bank,  savings  and  loan  association,  credit union, or federal credit union within the state and duly authorized to receive  deposits  in  the state of New York and which shall earn interest at a rate which shall be at  not  less  than the prevailing rate of interest earned by other such deposits in such banks, savings banks, savings and loan associations, or credit unions under this section, or shall be placed in a trust  company in an investment backed by the government of the United States and shall not  be  commingled  with  other  moneys  of  the  funeral firm, funeral director, undertaker, cemetery, or other person, firm or corporation  or become  the  funds  of  the  funeral firm, funeral director, undertaker, cemetery, or other person, firm or corporation, and shall be so held  on deposit,  together  with any interest thereon with interest earned being accrued daily and credited monthly,  until  said  merchandise  has  been actually  physically  delivered  and  said  personal  services have been rendered, unless sooner repaid, in whole or in part.  No  funeral  firm, funeral  director,  undertaker,  cemetery  or  any other person, firm or corporation, shall  discharge  the  obligation  established  under  this section  to  deposit  or place money with a bank, national bank, federal savings bank,  federal  savings  and  loan  association,  savings  bank, savings  and  loan  association,  credit  union, federal credit union or trust company within the state through a surety bond or other  financial instrument unless expressly provided under this section.  (b)  Such  funeral  firm,  funeral  director, undertaker, cemetery, or other person, firm or corporation  which  received  such  moneys  shall, within  thirty  business  days  after  the  deposit or any change in the institution  in  which  such  funds  are  deposited,   provide   written notification  to  the person who made such payment of the institution of the deposit and, until such moneys have  been  repaid  or  the  personal services  and merchandise have been provided, shall annually provide the person who made such payment with a statement identifying  the  location and annual interest earned by the account.  (c)  Upon  request  of the person who made such payment, or his or her representative, the funeral firm, funeral director, undertaker, cemetery or other person, firm or corporation which received  such  moneys  shall provide  a  statement within thirty days of such request identifying the location of the account, amount of such account and interest  earned  on such account. Upon the provision of any merchandise or personal services in  connection  with  any  such  agreement,  the  funeral  firm, funeral director, undertaker, cemetery or  other  person,  firm  or  corporation which  received  such  moneys  shall  provide  a statement itemizing the merchandise  or  personal  services  provided  and  the  cost  of   such  merchandise  or  personal services and describing the disposition of all moneys in the account. Copies of such  statements  and  the  records  on which they are based shall be made available for inspection and shall be made  available  during ordinary business hours for copying upon written request by  any  state  agency  regulating  the  funeral  firm,  funeral director,  undertaker,  cemetery  or  other  person, firm or corporation which received such money or enforcing the requirements of this section, provided a complaint, either oral or written, has been received,  or  an inspector  has  grounds  to believe that serious or repeat violations of this section have occurred.  (d) Moneys paid for such an agreement for an applicant or recipient of supplemental security income benefits under section two hundred nine  of the  social  services  law  or of medical assistance under section three hundred sixty-six of such law, or moneys paid by such  an  applicant  or recipient  for  such an agreement for his or her family member, shall be placed into a trust which shall be  irrevocable  but  under  which  such applicant/recipient  reserves  the  right  to  select  any funeral firm, funeral director, undertaker, cemetery or  any  other  person,  firm  or corporation  to  whom  such payment is made and to change such selection any time to any type of funeral or any funeral firm,  funeral  director, cemetery  or  any other person, firm or corporation to whom such payment is made, located in the state of New York or any other state.  Any  such change must be carried out within ten business days following receipt of a  request  by  the  purchaser  to  the  funeral firm, funeral director, cemetery or any other person, firm or corporation to whom  such  payment is  made,  with  which  such  trust was established. This requirement is subject to any limits set forth in federal law or regulation  pertaining to disregarded resources or income.   2.  The  amount of any and all moneys paid under or in connection with such an agreement, together with interest, if any, accrued thereon while on deposit as so required shall be repaid on demand at any time prior to the delivery of the merchandise and/or the  rendering  of  the  personal services.  No  administrative, consultation or other fee may be assessed against the person making such payment in connection  with  or  planning for  such agreement. Provided, however, neither the applicant, recipient or other purchaser of preneed  funeral  goods  or  services  through  an irrevocable  trust,  their  legal  representative  nor the heirs of such person, shall be entitled to any repayment of the moneys  which  created such trust.   3. Any such agreement must be in writing and must:  (a) Identify all moneys paid or to be paid; and  (b) Identify any fees paid to the person administering such trust fund by  a  third  party,  provided,  however, any such fees shall not exceed seventy-five hundredths of one percent of the amount of such trust fund; and  (c) Except for an irrevocable trust established  pursuant  to  section two  hundred  nine  of  the  social  services  law  or  paragraph (d) of subdivision one of this section, notify the person making  such  payment of  his  or  her  right  to be repaid moneys paid, together with accrued interest, as described in this section  and  of  his  or  her  right  to receive an annual statement; and  (d)  Identify  the  provider of each service or item of merchandise to the extent agreed upon, and fully describe the service or merchandise to the extent agreed upon; and  (e) Describe the obligations of each party:  (i) in the event the service or merchandise described in the agreement cannot, for reasons beyond the control of the parties, be provided  when needed;  (ii)  in the event the cost of such services or merchandise, when such services or merchandise is to be provided, exceeds  the  amount  of  the moneys paid and accrued interest; and  (iii)  in the event the amount of the moneys paid and accrued interest exceeds the cost of such services or merchandise when  they  are  to  be provided.  If  the  agreement  does  not  provide  to  the contrary, the services or merchandise described in the agreement must be provided  for no  more  than the price stated therein. Except for an irrevocable trust established pursuant to section two hundred nine of the social  services law  or  paragraph (d) of subdivision one of this section, any moneys in excess of the amount set forth in the agreement must be  repaid  to  the person  who  made  the  payment  or  to  the  estate of such person. The agreement must also specify the name and address of a person not  living at  the  address  of the person who made payments under or in connection with the agreement, to whom required notices may be sent if  the  person who  made  payments  under or in connection with the agreement cannot be contacted. The person making such payments may  decline  in  writing  to specify  the  name  and address of a person not living at the address of the person making such payments to whom such notice may be sent; and  (f) With respect  to  an  agreement  for  an  irrevocable  trust  fund pursuant  to  section  two  hundred  nine  of the social services law or paragraph (d) of subdivision one of this section, include the  following statement in the agreement in conspicuous print of at least twelve point type:                                DISCLOSURE   NEW  YORK LAW REQUIRES THIS AGREEMENT TO BE IRREVOCABLE FOR APPLICANTS FOR AND RECIPIENTS OF SUPPLEMENTAL SECURITY BENEFITS UNDER  SECTION  TWO HUNDRED  NINE  OF THE SOCIAL SERVICES LAW OR OF MEDICAL ASSISTANCE UNDER SECTION THREE HUNDRED SIXTY-SIX OF THE SOCIAL SERVICES LAW, AND FOR  THE MONEYS PUT INTO A TRUST UNDER THIS AGREEMENT TO BE USED ONLY FOR FUNERAL AND  BURIAL  EXPENSES.  WHETHER  THE  AGREEMENT  IS FOR YOUR FUNERAL AND BURIAL EXPENSES OR FOR THOSE OF A FAMILY MEMBER, IF ANY  MONEY  IS  LEFT OVER  AFTER  YOUR FUNERAL AND BURIAL EXPENSES HAVE BEEN PAID, IT WILL GO TO THE COUNTY. YOU MAY CHANGE YOUR CHOICE OF FUNERAL HOME AT  ANY  TIME. IF  THIS  AGREEMENT  IS  FOR THE FUNERAL AND BURIAL EXPENSES OF A FAMILY MEMBER, AFTER YOUR DEATH SUCH FAMILY MEMBER MAY  CHANGE  THE  CHOICE  OF FUNERAL HOME AT ANY TIME.  (g)  Any promotional literature prepared after January first, nineteen hundred ninety-seven by a funeral firm,  funeral  director,  undertaker, cemetery,  or  any  other  person,  firm  or corporation for prearranged funeral  and  burial  services  must  contain  language  disclosing  the irrevocable  nature  of burial trusts established by or for an applicant or  recipient  of  supplemental  security  income  benefits  or  medical assistance.   4. Any provision of any such agreement whereby a person who pays money under  or  in  connection therewith waives any provision of this section shall be void.   5. (a) Upon the sale or transfer of any business, firm, corporation or other entity having received moneys in connection with  such  agreements or  the  transfer  of  control  over  such money, both the new owner and former owner or the estate of the former  owner,  or  both  the  persons currently  and  formerly  having  control over such money, shall, within thirty days of such sale or transfer,  notify,  in  writing,  each  such person  who  has paid moneys of the sale or transfer, including the name and address of the new and former owner.  Copies  of  such  notification shall  be  made  available  for  inspection  and shall be made available during ordinary business hours for copying upon written request  by  any official or agency having jurisdiction.  (b) Upon the sale or other transfer of any business, firm, corporation or   other  entity  having  received  moneys  in  connection  with  such agreements or upon  any  transfer  of  control  over  such  moneys,  the transferee  shall  be  liable for compliance with all provisions of this section  including  the repayment of any moneys and provision of funeral merchandise and services, and for compliance with all other requirements of this section if the  transferor  or  a  transferor's  predecessor  in interest  was  liable  for such compliance with the requirements of this section. Such liability shall attach whether or  not  the  successor  in interest  has,  upon  conveyance  of such business, firm, corporation or other entity, received such moneys or has knowledge of the existence  of the  agreement  as  herein  described. Such liability shall attach where there is proof of a valid agreement for  providing  funeral  merchandise and  services,  and  the funeral director, undertaker, cemetery or other person, firm or corporation has not refunded the  moneys  received  from the customer.  (c) Upon the sale or other transfer of any business, firm, corporation or  other  entity  having  received  such  moneys, or upon a transfer of control of  such  moneys,  the  transferor  shall  disclose  a  complete accounting  of  all moneys transferred pursuant to such agreement to the transferee, including  the  names  and  addresses  of  all  persons  who deposited  moneys with such business, firm, corporation or other entity, the amount and location of such  moneys,  the  names  and  addresses  of persons who have received refunds and the amount of such refund.  (d)  Upon the termination, cessation of operation or discontinuance of any business, firm, corporation  or  other  entity  which  has  received moneys  in  connection  with  such agreements or is otherwise liable for compliance with the requirements of this section, such  business,  firm, corporation  or  other  entity  shall  repay all such monies and accrued interest as if a demand had been made therefor  within  thirty  days  of such  termination  or discontinuation. Copies of records relating to the repayment of such moneys shall be available for inspection and shall  be made  available  during ordinary business hours for copying upon written request by the appropriate official or agency having jurisdiction.   6. Any person, firm or corporation who or which, having  received  any moneys  under  or  in connection with such an agreement, shall knowingly and willfully fail to deposit or keep such moneys on  deposit  shall  be guilty  of  a  misdemeanor  or,  shall  knowingly  and willfully fail to provide the notification required pursuant to subdivision five  of  this section  shall be guilty of a violation. Any person, firm or corporation who or which, having received any moneys under  or  in  connection  with such an agreement, or who or which is deemed responsible for such moneys pursuant  to  subdivision  five  of  this  section shall, without lawful reason, knowingly and willfully fail to repay, upon demand, any and  all such  moneys  as  provided  in  this  section,  or  shall  knowingly and willfully misappropriate such money for a use  not  authorized  in  this section,  shall,  in addition to any other penalties provided by law, be guilty of a misdemeanor.   7. Whenever there shall be a violation of this section an  application may  be  made  by  the attorney general in the name of the people of the state of New York to a court or justice having jurisdiction by a special proceeding to issue an injunction, and upon notice to the  defendant  of not  less than five days, to enjoin and restrain the continuance of such violation; and if it shall appear to the satisfaction of  the  court  or justice  that  the  defendant  has,  in  fact, violated this section, an injunction may  be  issued  by  the  court  or  justice,  enjoining  and restraining  any  further  violations,  without requiring proof that any person has, in fact, been  injured  or  damaged  thereby.  In  any  such  proceeding,  the  court  may  make allowances to the attorney general as provided in paragraph six of subdivision  (a)  of  section  eighty-three hundred   three  of  the  civil  practice  law  and  rules,  and  direct restitution. Whenever the court shall determine that a violation of this section  has  occurred, the court may impose a civil penalty of not more than one thousand dollars for each  violation;  provided,  however,  the court  shall not impose a civil penalty in any case where the department of health has imposed such a penalty for an identical violation  of  the provisions  of  the  public  health  law.  In  connection  with any such proposed application the attorney general is authorized  to  take  proof and make a determination of the relevant facts and to issue subpoenas in accordance   with   the   civil  practice  law  and  rules,  and  direct restitution.   8. Records required by this section to be maintained and  true  copies of  agreements shall be retained for four years following the provisions of funeral merchandise and services or, if a preneed administrator,  for four  years  after final payment is disbursed pursuant to the agreement. In the event the funds are returned to  the  person  who  deposited  the money  or  their  representative,  such records, including the record of return of funds shall be retained for a period of four years  after  the sale, transfer, termination, cessation of operation or discontinuance of the  funeral.  For  purposes of this section, records shall include, but not be limited to, a copy of the agreement, a death  certificate  and  a copy  of  the  check  or  other  payment made pursuant to the agreement. Copies of such records shall be made available for inspection and  shall be  made  available  during  ordinary  business  hours  for copying upon written request by any state agency regulating the funeral firm, funeral director, undertaker, cemetery or  other  person,  firm  or  corporation which received such money or enforcing the requirements of this section, provided  a  complaint, either oral or written, has been received, or an inspector has grounds to believe that serious or  repeat  violations  of this section have occurred.   9.  This  section  shall  not apply to the sale of lots or graves by a cemetery.   10. For the purposes of this section,  "preneed  administrator"  means any person, partnership, firm, limited liability company or corporation, which is either domiciled in or doing business in the state of New York, and  which  has  received money under or in connection with an agreement executed pursuant to this section; and "county" shall refer  only  to  a county  located  within  the  state  of  New  York.  For the purposes of subdivision five of this section,  "preneed  administrator"  shall  also include  any successor, assignee or transferee of funds held pursuant to this section.   11. Notwithstanding any other provision of law to  the  contrary,  the following  provisions  shall be applicable to each preneed administrator of written preneed accounts, both revocable and irrevocable:  (a) The assets of such an account shall be deemed abandoned as of  the later of (i) three years after the date of death of the person for whose funeral  or  burial  such assets were to be used; or (ii) one year after the preneed administrator has  determined  that  the  person  for  whose funeral  or  burial  such  assets were to be used has died if such death occurred less than two years prior to such  determination.  The  preneed administrator  shall make reasonable attempts to determine if the person for whose funeral or burial such assets were to be used has died,  using available  information from federal and state sources. Upon the death of a person for whose funeral or burial such merchandise or services are to be furnished, the preneed administrator shall  determine  the  name  and address  of  the funeral director who performed the funeral services. If  the preneed administrator determines that the funeral director has  been paid   in  full  for  the  funeral  services,  and  if  the  account  is irrevocable, the preneed administrator shall, on or before the tenth day of  March  in  each  year,  transfer  the  assets of such account to the indigent care burial fund for the county in which the person  for  whose funeral or burial such assets were to be used resided at the date of his or  her  death. If the preneed administrator determines that the funeral director has been paid in full for the  funeral  services,  and  if  the account  is revocable, the preneed administrator shall, on or before the tenth day of March in each year, pay or deliver to the state comptroller pursuant to section one thousand three hundred fifteen of the  abandoned property  law,  the assets of such account which was deemed to have been abandoned as of the thirty-first day of December of such calendar year.  (1) Upon the death of a  person  for  whose  funeral  or  burial  such merchandise   or   services   are   to  be  furnished,  if  the  preneed administrator determines that the funeral director has not been paid  in full  for  the funeral services, the preneed administrator shall pay the funeral director for the funeral services upon receipt of  the  required documentation for paying claims for funeral services. If the balance due is more than the cost of the funeral services, the preneed administrator shall  transfer the remaining balance, if an irrevocable account, to the indigent care burial fund as  provided  in  this  paragraph,  or,  if  a revocable  account,  to  the  state  comptroller  as  provided  in  this paragraph.  (2) Upon the death of a  person  for  whose  funeral  or  burial  such merchandise  or  services  are  to  be  furnished,  and  with reasonable efforts, the preneed administrator cannot determine the name and address of the funeral director who provided the funeral services,  the  preneed administrator, if the account was irrevocable, shall transfer the assets of such account to the indigent care burial fund for the county in which the  person for whose funeral or burial such merchandise or services are to be  furnished  resided  at  the  time  the  irrevocable  account  was established,  such  transfer  to be made as described in this paragraph. The preneed administrator, if the account was revocable,  shall  pay  or deliver  the  assets  of  such  account  to  the state comptroller, such transfer to be made as described in this paragraph.  (b) If the preneed administrator is not able to  determine  a  current proper  address of an account for the person for whose funeral or burial such merchandise or services are to be furnished such  that  the  annual statements  mailed  regarding  the  account  are returned to the preneed administrator as undeliverable, and  such  administrator  cannot,  after making  reasonable  efforts,  determine a current and proper address for the person for whose funeral or burial such merchandise or services  are to  be furnished, the account shall be deemed dormant if (i) the preneed administrator has not been able to determine a correct address  for  the person  for  whose funeral or burial such merchandise or services are to be furnished for a period of fifteen consecutive years, and  (ii)  based upon  the  information  contained  in  the written agreement the preneed administrator can determine that, if the person  for  whose  funeral  or burial  such  merchandise  or  services  are  to  be furnished were then living, the person for whose  funeral  or  burial  such  merchandise  or services  are  to be furnished would have reached the age of one hundred fifteen years.  (1) If the account is deemed dormant as defined in this paragraph, the preneed administrator shall transfer the assets of such account,  if  it is  an  irrevocable  account,  to  the indigent care burial fund for the county in which the person for whose funeral or burial such  merchandise or  services  are  to  be  furnished resided at the time the irrevocable  account was established. The administrator shall transfer the assets  of such  account, if it is a revocable account, to the state comptroller as provided in paragraph (a) of this subdivision.  (2)  Nothing  contained in this subdivision shall prevent a person for whose  funeral  or  burial  such  merchandise  or  services  are  to  be furnished,  if  an irrevocable account, or a funeral home which provided funeral services  to  the  person  for  whose  funeral  or  burial  such merchandise  or  services  are to be furnished, or a person who has paid for funeral services for which an irrevocable account  was  established, from  requesting  and  receiving  the  lesser  of (i) the actual cost or amount paid for the funeral, or  (ii)  the  amount  transferred  to  the indigent  burial fund, in the event that the person for whose funeral or burial such merchandise or services are to be furnished  is  living,  or that  the  funeral  services  for the person for whose funeral or burial such merchandise or services are to be furnished were not paid in  full, or  that a person has paid for funeral services for which an irrevocable account was established. Nothing contained  in  this  subdivision  shall prevent  a  person  otherwise authorized by law to seek reimbursement of the funds from a revocable account pursuant to the applicable provisions of the abandoned property law.   12. A preneed administrator operating under this section shall conduct an audit of all of its accounts relating to preneed agreements as of the thirty-first of December of each calendar year. The audit shall:  (a) Be performed by a certified public accountant licensed to practice in New York state;  (b) Be completed and delivered to the preneed administrator within one hundred twenty days of the end of such calendar year;  (c) Verify, by way  of  a  representative  sample,  that  the  preneed administrator has a signed copy of the agreement for each account;  (d) Verify, by way of a representative sample, that appropriate income tax  reports have been sent by the preneed administrator to the owner of each account;  (e) Verify that the investment of all funds for the agreements  is  in compliance with this section;  (f)  Verify,  by  an appropriate sampling method, that the earnings on the investments are being properly applied to each account and that  the earnings are credited to each account at least monthly;  (g)  Express  an  opinion that the financial statements of the preneed administrator fairly represent the  financial  condition  of  the  funds received  in  all  material respects, and that all financial information distributed by the preneed administrator to consumers, funeral homes  or other parties is accurate; and  (h)  Verify  that  the  stated  yield credited to the account for that fiscal year, as announced by the preneed administrator, is accurate.   13. (a) In no event shall the  administrative  fees  charged  under  a preneed agreement in any calendar year exceed the net income credited to an  account  for  such calendar year; that is, the account balance shall never be reduced in any calendar year  because  of  administrative  fees charged against the account.  (b)  Any  administrative fees otherwise payable in relation to preneed agreements which are not paid  in  any  calendar  year  because  of  the limitations  in paragraph (a) of this subdivision shall not be collected in any subsequent calendar year.   14. A preneed administrator operating under this section shall, at the end of each calendar year, have  all  assets  valued  and  presented  in accordance with generally accepted accounting principles.