Bill Text: IL HB3486 | 2017-2018 | 100th General Assembly | Engrossed

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Bill Title: Amends the Illinois Funeral or Burial Funds Act. Limits certain provisions concerning payment under pre-need contracts to pre-need contracts entered into prior to the effective date of the amendatory Act. Makes changes to the definition of "seller". Provides that, before a seller and purchaser enter into a pre-need contract or pre-need sales contract, the seller must disclose and fully explain certain funding options. Provides that, if a pre-need contract includes the sale of funeral services and merchandise: (1) the seller must be a funeral director licensed under the Funeral Directors and Embalmers Licensing Code who is employed at the time of the sale of the contract by the funeral establishment through which the funeral services and merchandise will be provided, (2) the contract must be filled out by a funeral director licensed under the Funeral Directors and Embalmers Licensing Code, and (3) the contract may only be executed by a funeral director licensed under the Funeral Directors and Embalmers Licensing Code. Amends the Illinois Pre-Need Cemetery Sales Act. Provides that sellers of pre-need sales contracts must be licensed by the Department of Financial and Professional Regulation, and requires specified continuing education. Limits certain provisions concerning payment under pre-need contracts to pre-need contracts entered into prior to the effective date of the amendatory Act. Provides that, before a seller and purchaser enter into a pre-need contract or pre-need sales contract, the seller must disclose and fully explain certain funding options. Makes other changes. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2019-01-08 - Session Sine Die [HB3486 Detail]

Download: Illinois-2017-HB3486-Engrossed.html

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AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Funeral or Burial Funds Act is
amended by changing Sections 1 and 1a and by adding Section 1c
as follows:
(225 ILCS 45/1) (from Ch. 111 1/2, par. 73.101)
Sec. 1. Payment under pre-need contract. Except as
otherwise provided in this Section, all sales proceeds paid to
any person, partnership, association or corporation with
respect to merchandise or services covered by this Act, upon
any agreement or contract, or any series or combination of
agreements or contracts, which has for a purpose the furnishing
or performance of funeral services, or the furnishing or
delivery of any personal property, merchandise, or services of
any nature in connection with the final disposition of a dead
human body, including, but not limited to, outer burial
containers, urns, combination casket-vault units, caskets and
clothing, for future use at a time determinable by the death of
the person or persons whose body or bodies are to be so
disposed of, shall be held to be trust funds, and shall be
placed in trust in accordance with Sections 1b and 2, or shall
be used to purchase life insurance or annuities in accordance

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with Section 2a. The person, partnership, association or
corporation receiving said payments under a pre-need contract
is hereby declared to be a trustee thereof until deposits of
funds are made in accordance with Section 1b or 2a of this Act.
This Section applies only to pre-need contracts entered
into prior to the effective date of this amendatory Act of the
100th General Assembly.
Nothing in this Act shall be construed to prohibit the
inclusion of outer burial containers in sales contracts under
the Illinois Pre-Need Cemetery Sales Act.
(Source: P.A. 96-879, eff. 2-2-10.)
(225 ILCS 45/1a) (from Ch. 111 1/2, par. 73.101a)
Sec. 1a. For the purposes of this Act, the following terms
shall have the meanings specified, unless the context clearly
requires another meaning:
"Beneficiary" means the person specified in the pre-need
contract upon whose death funeral services or merchandise shall
be provided or delivered.
"Licensee" means a seller of a pre-need contract who has
been licensed by the Comptroller under this Act.
"Outer burial container" means any container made of
concrete, steel, wood, fiberglass or similar material, used
solely at the interment site, and designed and used exclusively
to surround or enclose a separate casket and to support the
earth above such casket, commonly known as a burial vault,

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grave box or grave liner, but not including a lawn crypt as
defined in the Illinois Pre-need Cemetery Sales Act.
"Parent company" means a corporation owning more than 12
cemeteries or funeral homes in more than one state.
"Person" means any person, partnership, association,
corporation, or other entity.
"Pre-need contract" means any agreement or contract, or any
series or combination of agreements or contracts, whether
funded by trust deposits or life insurance policies or
annuities, which has for a purpose the furnishing or
performance of funeral services or the furnishing or delivery
of any personal property, merchandise, or services of any
nature in connection with the final disposition of a dead human
body. Nothing in this Act is intended to regulate the content
of a life insurance policy or a tax-deferred annuity.
"Provider" means a person who is obligated for furnishing
or performing funeral services or the furnishing or delivery of
any personal property, merchandise, or services of any nature
in connection with the final disposition of a dead human body.
"Purchaser" means the person who originally paid the money
under or in connection with a pre-need contract.
"Sales proceeds" means the entire amount paid to a seller,
exclusive of sales taxes paid by the seller, finance charges
paid by the purchaser, and credit life, accident or disability
insurance premiums, upon any agreement or contract, or series
or combination of agreements or contracts, for the purpose of

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performing funeral services or furnishing personal property,
merchandise, or services of any nature in connection with the
final disposition of a dead human body, including, but not
limited to, the retail price paid for such services and
personal property and merchandise.
"Purchase price" means sales proceeds less finance charges
on retail installment contracts.
"Seller" means a the person, licensed as a funeral director
or a funeral director and embalmer under the Funeral Directors
and Embalmers Licensing Code, who sells or offers to sell the
pre-need contract to a purchaser, whether funded by a trust
agreement, life insurance policy, or tax-deferred annuity, or
other means agreed to by the purchaser and seller in the
pre-need contract.
"Trustee" means a person authorized to hold funds under
this Act.
(Source: P.A. 92-419, eff. 1-1-02.)
(225 ILCS 45/1c new)
Sec. 1c. Disclosures; contract requirements. Before a
seller and purchaser enter into a pre-need contract for funeral
services or merchandise, the seller must disclose and fully
explain what financial plans are offered by the seller and the
funeral establishment.
If a pre-need contract includes the sale of funeral
services and merchandise: (1) the seller must be a funeral

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director licensed under the Funeral Directors and Embalmers
Licensing Code who is employed at the time of the sale of the
contract by the funeral establishment through which the funeral
services and merchandise will be provided, (2) the contract
must be filled out by a funeral director licensed under the
Funeral Directors and Embalmers Licensing Code, and (3) the
contract may only be executed by a funeral director licensed
under the Funeral Directors and Embalmers Licensing Code.
Section 10. The Illinois Pre-Need Cemetery Sales Act is
amended by changing Sections 4, 15, and 17 and by adding
Section 15.5 as follows:
(815 ILCS 390/4) (from Ch. 21, par. 204)
Sec. 4. Definitions. As used in this Act, the following
terms shall have the meaning specified:
(A) "Pre-need sales contract" or "Pre-need sales" means any
agreement or contract or series or combination of agreements or
contracts which have for a purpose the sale of cemetery
merchandise, cemetery services or undeveloped interment,
entombment or inurnment spaces where the terms of such sale
require payment or payments to be made at a currently
determinable time and where the merchandise, services or
completed spaces are to be provided more than 120 days
following the initial payment on the account. An agreement or
contract for or a private sale of a casket, urn, floral

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arrangement, memorial, marker, or monument shall not be deemed
a "pre-need sales contract" or a "pre-need sale" if the casket,
urn, floral arrangement, memorial, marker, or monument is
delivered within 180 days following initial payment on the
account and work thereon commences a reasonably short time
after initial payment on the account.
(B) "Delivery" occurs when:
(1) Physical possession of the merchandise is
transferred or the easement for burial rights in a
completed space is executed, delivered and transferred to
the buyer; or
(2) Following authorization by a purchaser under a
pre-need sales contract, title to the merchandise has been
transferred to the buyer and the merchandise has been paid
for and is in the possession of the seller who has placed
it, until needed, at the site of its ultimate use; or
(3) Following authorization by a purchaser under a
pre-need sales contract, the merchandise has been
permanently identified with the name of the buyer or the
beneficiary and delivered to a licensed and bonded
warehouse and both title to the merchandise and a warehouse
receipt have been delivered to the purchaser or beneficiary
and a copy of the warehouse receipt has been delivered to
the licensee for retention in its files; except that in the
case of outer burial containers, the use of a licensed and
bonded warehouse as set forth in this paragraph shall not

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constitute delivery for purposes of this Act. Nothing
herein shall prevent a seller from perfecting a security
interest in accordance with the Uniform Commercial Code on
any merchandise covered under this Act.
All warehouse facilities to which sellers deliver
merchandise pursuant to this Act shall:
(i) be either located in the State of Illinois or
qualify as a foreign warehouse facility as defined
herein;
(ii) submit to the Comptroller not less than
annually, by March 1 of each year, a report of all
cemetery merchandise stored by each licensee under
this Act which is in storage on the date of the report;
(iii) permit the Comptroller or his designee at any
time to examine stored merchandise and to examine any
documents pertaining thereto;
(iv) submit evidence satisfactory to the
Comptroller that all merchandise stored by said
warehouse for licensees under this Act is insured for
casualty or other loss normally assumed by a bailee for
hire;
(v) demonstrate to the Comptroller that the
warehouse has procured and is maintaining a
performance bond in the form, content and amount
sufficient to unconditionally guarantee to the
purchaser or beneficiary the prompt shipment of the

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cemetery merchandise.
(C) "Cemetery merchandise" means items of personal
property normally sold by a cemetery authority not covered
under the Illinois Funeral or Burial Funds Act, including but
not limited to:
(1) memorials,
(2) markers,
(3) monuments,
(4) foundations, and
(5) outer burial containers.
(D) "Undeveloped interment, entombment or inurnment
spaces" or "undeveloped spaces" means any space to be used for
the reception of human remains that is not completely and
totally constructed at the time of initial payment therefor in
a:
(1) lawn crypt,
(2) mausoleum,
(3) garden crypt,
(4) columbarium, or
(5) cemetery section.
(E) "Cemetery services" means those services customarily
performed by cemetery or crematory personnel in connection with
the interment, entombment, inurnment or cremation of a dead
human body.
(F) "Cemetery section" means a grouping of spaces intended
to be developed simultaneously for the purpose of interring

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human remains.
(G) "Columbarium" means an arrangement of niches that may
be an entire building, a complete room, a series of special
indoor alcoves, a bank along a corridor or part of an outdoor
garden setting that is constructed of permanent material such
as bronze, marble, brick, stone or concrete for the inurnment
of human remains.
(H) "Lawn crypt" means a permanent underground crypt
usually constructed of reinforced concrete or similar material
installed in multiple units for the entombment of human
remains.
(I) "Mausoleum" or "garden crypt" means a grouping of
spaces constructed of reinforced concrete or similar material
constructed or assembled above the ground for entombing human
remains.
(J) "Memorials, markers and monuments" means the object
usually comprised of a permanent material such as granite or
bronze used to identify and memorialize the deceased.
(K) "Foundations" means those items used to affix or
support a memorial or monument to the ground in connection with
the installation of a memorial, marker or monument.
(L) "Person" means an individual, corporation,
partnership, joint venture, business trust, voluntary
organization or any other form of entity.
(M) "Seller" means any person selling or offering for sale
cemetery merchandise, cemetery services or undeveloped

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interment, entombment, or inurnment spaces in accordance with a
pre-need sales contract. The seller must be licensed in the
State of Illinois by the Department of Financial and
Professional Regulation and shall attend at least 24 hours of
continuing education in every 2-year period. The continuing
education shall be approved by the Department of Financial and
Professional Regulation.
(N) "Religious cemetery" means a cemetery owned, operated,
controlled or managed by any recognized church, religious
society, association or denomination or by any cemetery
authority or any corporation administering, or through which is
administered, the temporalities of any recognized church,
religious society, association or denomination.
(O) "Municipal cemetery" means a cemetery owned, operated,
controlled or managed by any city, village, incorporated town,
township, county or other municipal corporation, political
subdivision, or instrumentality thereof authorized by law to
own, operate or manage a cemetery. "Municipal cemetery" also
includes a cemetery placed in receivership pursuant to this Act
while such cemetery is in receivership.
(O-1) "Outer burial container" means a container made of
concrete, steel, wood, fiberglass, or similar material, used
solely at the interment site, and designed and used exclusively
to surround or enclose a separate casket and to support the
earth above such casket, commonly known as a burial vault,
grave box, or grave liner, but not including a lawn crypt.

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(P) "Sales price" means the gross amount paid by a
purchaser on a pre-need sales contract for cemetery
merchandise, cemetery services or undeveloped interment,
entombment or inurnment spaces, excluding sales taxes, credit
life insurance premiums, finance charges and Cemetery Care Act
contributions.
(Q) (Blank).
(R) "Provider" means a person who is responsible for
performing cemetery services or furnishing cemetery
merchandise, interment spaces, entombment spaces, or inurnment
spaces under a pre-need sales contract.
(S) "Purchaser" or "buyer" means the person who originally
paid the money under or in connection with a pre-need sales
contract.
(T) "Parent company" means a corporation owning more than
12 cemeteries or funeral homes in more than one state.
(U) "Foreign warehouse facility" means a warehouse
facility now or hereafter located in any state or territory of
the United States, including the District of Columbia, other
than the State of Illinois.
A foreign warehouse facility shall be deemed to have
appointed the Comptroller to be its true and lawful attorney
upon whom may be served all legal process in any action or
proceeding against it relating to or growing out of this Act,
and the acceptance of the delivery of stored merchandise under
this Act shall be signification of its agreement that any such

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process against it which is so served, shall be of the same
legal force and validity as though served upon it personally.
Service of such process shall be made by delivering to and
leaving with the Comptroller, or any agent having charge of the
Comptroller's Department of Cemetery and Burial Trusts, a copy
of such process and such service shall be sufficient service
upon such foreign warehouse facility if notice of such service
and a copy of the process are, within 10 days thereafter, sent
by registered mail by the plaintiff to the foreign warehouse
facility at its principal office and the plaintiff's affidavit
of compliance herewith is appended to the summons. The
Comptroller shall keep a record of all process served upon him
under this Section and shall record therein the time of such
service.
(Source: P.A. 96-879, eff. 2-2-10.)
(815 ILCS 390/15) (from Ch. 21, par. 215)
Sec. 15. (a) Whenever a seller receives anything of value
under a pre-need sales contract, the person receiving such
value shall deposit 50% of all proceeds received into one or
more trust funds maintained pursuant to this Section, except
that, in the case of proceeds received for the purchase of
outer burial containers, 85% of the proceeds shall be deposited
into one or more trust funds. Such deposits shall be made until
the amount deposited in trust equals 50% of the sales price of
the cemetery merchandise, cemetery services and undeveloped

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spaces included in such contract, except that, in the case of
deposits for outer burial containers, deposits shall be made
until the amount deposited in trust equals 85% of the sales
price. In the event an installment contract is factored,
discounted or sold to a third party, the seller shall deposit
an amount equal to 50% of the sales price of the installment
contract, except that, for the portion of the contract
attributable to the sale of outer burial containers, the seller
shall deposit an amount equal to 85% of the sales price.
Proceeds required to be deposited in trust which are
attributable to cemetery merchandise and cemetery services
shall be held in a "Cemetery Merchandise Trust Fund". Proceeds
required to be deposited in trust which are attributable to the
sale of undeveloped interment, entombment or inurnment spaces
shall be held in a "Pre-construction Trust Fund". If
merchandise is delivered for storage in a bonded warehouse, as
authorized herein, and payment of transportation or other
charges totaling more than $20 will be required in order to
secure delivery to the site of ultimate use, upon such delivery
to the warehouse the seller shall deposit to the trust fund the
full amount of the actual or estimated transportation charge.
Transportation charges which have been prepaid by the seller
shall not be deposited to trust funds maintained pursuant to
this Section. As used in this Section, "all proceeds" means the
entire amount paid by a purchaser in connection with a pre-need
sales contract, including finance charges and Cemetery Care Act

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contributions, but excluding sales taxes and credit life
insurance premiums.
(b) The seller shall act as trustee of all amounts received
for cemetery merchandise, services, or undeveloped spaces
until those amounts have been deposited into the trust fund.
All trust deposits required by this Act shall be made within 30
days following the end of the month of receipt. The seller must
retain a corporate fiduciary as an independent trustee for any
amount of trust funds. Upon 30 days' prior written notice from
the seller to the Comptroller, the seller may change the
trustee of the trust fund. Failure to provide the Comptroller
with timely prior notice is an intentional violation of this
Act.
(c) A trust established under this Act must be maintained
with a corporate fiduciary as defined in Section 1-5.05 of the
Corporate Fiduciary Act or with a foreign corporate fiduciary
recognized by Article IV of the Corporate Fiduciary Act.
(d) Funds deposited in the trust account shall be
identified in the records of the seller by the name of the
purchaser. Nothing shall prevent the trustee from commingling
the deposits in any such trust fund for purposes of the
management thereof and the investment of funds therein as
provided in the "Common Trust Fund Act", approved June 24,
1949, as amended. In addition, multiple trust funds maintained
pursuant to this Act may be commingled or commingled with other
funeral or burial related trust funds, provided that all record

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keeping requirements imposed by or pursuant to law are met.
(e) In lieu of a pre-construction trust fund, a seller of
undeveloped interment, entombment or inurnment spaces may
obtain and file with the Comptroller a performance bond in an
amount at least equal to 50% of the sales price of the
undeveloped spaces or the estimated cost of completing
construction, whichever is greater. The bond shall be
conditioned on the satisfactory construction and completion of
the undeveloped spaces as required in Section 19 of this Act.
Each bond obtained under this Section shall have as surety
thereon a corporate surety company incorporated under the laws
of the United States, or a State, the District of Columbia or a
territory or possession of the United States. Each such
corporate surety company must be authorized to provide
performance bonds as required by this Section, have paid-up
capital of at least $250,000 in cash or its equivalent and be
able to carry out its contracts. Each pre-need seller must
provide to the Comptroller, for each corporate surety company
such seller utilizes, a statement of assets and liabilities of
the corporate surety company sworn to by the president and
secretary of the corporation by January 1 of each year.
The Comptroller shall prohibit pre-need sellers from doing
new business with a corporate surety company if the company is
insolvent or is in violation of this Section. In addition the
Comptroller may direct a pre-need seller to reinstate a
pre-construction trust fund upon the Comptroller's

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determination that the corporate surety company no longer is
sufficient security.
All performance bonds issued pursuant to this Section must
be irrevocable during the statutory term for completing
construction specified in Section 19 of this Act, unless
terminated sooner by the completion of construction.
(f) Whenever any pre-need contract shall be entered into
and include 1) items of cemetery merchandise and cemetery
services, and 2) rights to interment, inurnment or entombment
in completed spaces without allocation of the gross sale price
among the items sold, the application of payments received
under the contract shall be allocated, first to the right to
interment, inurnment or entombment, second to items of cemetery
merchandise and cemetery services, unless some other
allocation is clearly provided in the contract.
(g) Any person engaging in pre-need sales who enters into a
combination sale which involves the sale of items covered by a
trust or performance bond requirement and any item not covered
by any entrustment or bond requirement, shall be prohibited
from increasing the gross sales price of those items not
requiring entrustment with the purpose of allocating a lesser
gross sales price to items which require a trust deposit or a
performance bond.
(h) This Section applies only to pre-need sales entered
into prior to the effective date of this amendatory Act of the
100th General Assembly.

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(Source: P.A. 96-879, eff. 2-2-10; 97-593, eff. 8-26-11.)
(815 ILCS 390/15.5 new)
Sec. 15.5. Disclosures; options. Beginning on the
effective date of this amendatory Act of the 100th General
Assembly, before a seller and purchaser enter into a pre-need
sales contract, the seller must disclose and fully explain that
the purchaser may fund the pre-need sales contract by choosing
one of the following options:
(1) depositing funds into a local banking institution
of the purchaser's choosing;
(2) depositing funds into a trust program operated by
the seller; or
(3) other means offered by the seller.
The purchaser shall then choose one of those options.
(815 ILCS 390/17) (from Ch. 21, par. 217)
Sec. 17. (a) The principal and undistributed income of the
trust created pursuant to Section 15 or Section 15.5 of this
Act shall be paid to the seller if:
(1) the seller certifies by sworn affidavit to the trustee
that the purchaser or the beneficiary named in the pre-need
contract has deceased and that seller has fully delivered or
installed all items included in the pre-need contract and fully
performed all pre-need cemetery services he is required to
perform under the pre-need contract; or

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(2) the seller certifies by sworn affidavit to the trustee
that seller has made full delivery, as defined herein.
(Source: P.A. 84-239.)
Section 99. Effective date. This Act takes effect upon
becoming law.
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INDEX
Statutes amended in order of appearance