2023 Tennessee Code › Title 46 - CEMETERIES (§§ 46-1-101 — 46-8-103) › Chapter 1 - REGULATION OF CEMETERIES (§§ 46-1-101 — 46-1-313) › Part 2 - FINANCIAL MANAGEMENT (§§ 46-1-201 — 46-1-218) › Section 46-1-207 - Pre-need sales contracts - Pre-need trust accounts

(a)
A sales contract shall be executed in duplicate, and a signed copy given to the purchaser. The contract shall contain the names of the purchaser and the seller and the name of any person, if other than the purchaser, who is to receive the cemetery merchandise or services contracted for, and a description of the cemetery merchandise and services shall appear in the contract.
(b)
(1)
A pre-need sales contract shall be enforceable against the purchaser, only if:
(A)
The seller is a cemetery company owning or operating a duly registered cemetery under this chapter; and
(B)
The seller, by the twentieth day of the month following the month of receipt of any consideration paid pursuant to the contract, deposits an amount equal to the procurement costs of the cemetery merchandise and services identified in the sales contract, plus twenty percent (20%) of the costs, in a special general fund trust account in a state or national bank authorized by law to administer trust funds. Upon finding that a cemetery company has failed to appropriately and timely deposit into any trust, the commissioner may, in addition to or in lieu of any other disciplinary action, require that deposits be made within a shorter time frame, after receipt of the funds, for a period not more than two (2) years after the finding of a violation. If the sales contract provides for payment on an installment or deferred basis, the seller may elect to pay into the trust account the pro rata portion relating to procurement cost of each installment or deferred payment received, or to pay one hundred twenty percent (120%) of the procurement cost computed as of the date of sale.
(2)
A general trust account shall be established and maintained for each cemetery owned or operated by a cemetery company, and each account shall bear the additional legend, "pre-need merchandise and services trust account."
(3)
(A)
A trustee establishing a trust pursuant to this section may establish:
(i)
A separate trust fund for each pre-need cemetery contract;
(ii)
A single trust fund for all pre-need cemetery contracts written by an individual cemetery; or
(iii)
A single master trust fund for all pre-need cemetery contracts written by multiple cemetery companies based in this state. The master trust must identify the subaccounts for each individual participating cemetery company trust.
(B)
A trustee managing a trust established pursuant to this section shall:
(i)
Manage the trust in accordance with the Tennessee Uniform Prudent Investor Act of 2002, compiled in title 35, chapter 14; however, §
35-14-103(b)
does not apply to a trust, or a trustee managing a trust, established pursuant to subdivision (b)(2); and
(ii)
Make accounting records for the trust available to the comptroller of the treasury and the department of commerce and insurance, upon request, for review and audit.
(C)
If the trustee uses a board for the management of a trust established pursuant to subdivision (b)(2), then the trustee must maintain insurance on behalf of each board member against liability asserted against or incurred by the board member in that capacity.
(c)
All deposits required by this part shall be pursuant to a written trust agreement with the trustee that holds the funds. The trust agreement shall:
(1)
State the circumstances under which funds will be deposited and disbursed;
(2)
Specify the trustee's fees, if any; and
(3)
Provide that the trustee shall furnish the trustor an accounting of general trust balances and earnings at least annually.
(d)
Specific funds deposited in the trust account shall be identified or earmarked by contract number and the name of the purchaser. Nothing shall prevent the trustee from commingling the deposits in any trust fund for purposes of the management of the trust fund or the investment of funds in the trust fund. The commissioner has the discretion to audit the records and the sources of the records tendered by the trustee and has full power, including power of subpoena, to inspect the records of the trustor. Failure to comply with the subpoena of the commissioner is a Class A misdemeanor.
(e)
(1)
For purposes of this part, procurement costs shall be the costs of the cemetery merchandise and services as of January 1 of the year in which the pre-need sales contract is executed. These costs shall be determined and substantiated by a wholesale price list of a manufacturer or supplier of the cemetery merchandise so sold or by a cost analysis or itemization of the cost of construction of lawn or mausoleum crypts sold by the cemetery company. The procurement costs so determined shall be the basis for the deposits required by subsection (b) and shall be adjusted and verified annually to the commissioner.
(2)
For the purposes of this part, procurement costs for interment services, including, but not limited to, entombment and inurnment services, shall not be less than the following: one hundred sixty-five dollars ($165) for interment services, one hundred ten dollars ($110) for entombment services, and forty-four dollars ($44.00) for inurnment services. The basis for determining the procurement costs for these interment services shall be provided to the commissioner annually and verified at the time of audit. The commissioner shall increase the minimum costs by the consumer price index of each calendar year beginning on January 1, 2007.
(f)
All deposits required by this part shall be in cash only.
(g)
(1)
With respect to pre-need sales of mausoleum crypts, the seller may, in lieu of depositing one hundred twenty percent (120%) of procurement costs, elect to set aside a crypt in inventory comparable to each crypt sold prior to construction; provided, that:
(A)
The seller establishes and maintains a record of crypts in inventory reduced by the number set aside under this subsection (g); and
(B)
The sales contract conveys interment rights or temporary interment rights pending completion of the crypt sold prior to construction.
(2)
Subject to the setting aside provided for in subdivision (g)(1), the seller shall at all times maintain its pre-need merchandise and services trust account in the amount required by subsection (b).
(h)
The seller shall offer the purchaser the option to pay any applicable sales or use tax on the selected cemetery merchandise or services at the time the contract is entered into. If the purchaser chooses to pay the tax, it shall be remitted to the department by the seller, and shall be considered full payment for the sales or use tax on the selected cemetery merchandise or services despite any changes in tax rate or cost of cemetery merchandise or services that may occur by the time of actual use. If the purchaser later cancels the pre-need contract, the amount of tax paid shall be refunded by the seller who may then claim that amount as a credit against any sales or use tax then due from the seller.
Amended by 2022 Tenn. Acts, ch. 705, s 4, eff. 1/1/2023.
Amended by 2022 Tenn. Acts, ch. 705, s 3, eff. 1/1/2023.
Amended by 2016 Tenn. Acts, ch. 911, Secs.s 8, s 16 eff. 4/27/2016.
Acts 1979, ch. 307, §§ 4(B), 4(D); T.C.A., §
46-2-203
; Acts 1986, ch. 693, §§ 2, 21; 1989, ch. 591, §§ 1, 6; 1996, ch. 958, § 1; 2002, ch. 685, § 1; T.C.A., §
46-2-403
; Acts 2006, ch. 1012, § 3.