Bill Text: NY A07651 | 2019-2020 | General Assembly | Introduced
Bill Title: Relates to cemetery trust funds and the maintenance and preservation of cemetery grounds.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2020-01-08 - referred to corporations, authorities and commissions [A07651 Detail]
Download: New_York-2019-A07651-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 7651 2019-2020 Regular Sessions IN ASSEMBLY May 14, 2019 ___________ Introduced by M. of A. PAULIN -- read once and referred to the Committee on Corporations, Authorities and Commissions AN ACT to amend the not-for-profit corporation law, in relation to ceme- tery trust funds The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subparagraph 2 of paragraph (a) of section 1507 of the 2 not-for-profit corporation law, as amended by chapter 509 of the laws of 3 2014, is amended to read as follows: 4 (2) The permanent maintenance fund is hereby declared to be and shall 5 be held by the corporation as a trust fund, for the purpose of maintain- 6 ing and preserving the cemetery, including all lots, crypts, niches, 7 plots, and parts thereof. The principal of such fund shall be invested 8 in such securities as are permitted for the investment of trust funds by 9 section 11-2.3 of the estates, powers and trusts law. The income in the 10 form of interest and ordinary dividends therefrom shall be used solely 11 for the maintenance and preservation of the cemetery grounds. [In addi-12tion, the governing board of the corporation may appropriate for expend-13iture solely for the maintenance and preservation of the cemetery14grounds a portion of the net appreciation, in the fair market value of15the principal of the trust, as is prudent under the standard established16by article five-A of this chapter, the prudent management of institu-17tional funds act. In the event that a cemetery corporation seeks to18appropriate any percentage of its net appreciation in its permanent19maintenance fund in accordance with this subparagraph, the cemetery20corporation shall provide notice of such proposed appropriation by21certified mail to the cemetery board not less than sixty days in advance22of such proposed appropriation and shall disclose such appropriation as23part of and in addition to their annual reporting requirements as24defined in section fifteen hundred eight of this article, setting forth25the amount of funds to be appropriated for such expenditure and itsEXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD11423-01-9A. 7651 2 1effect on the permanent maintenance fund. Such proposed appropriation2shall become effective sixty days after receipt of such notice, unless3the cemetery board within such sixty-day period notifies the cemetery4corporation that the board objects to the proposed appropriation.5Notwithstanding the foregoing provisions of this subparagraph, all prin-6cipal of the permanent maintenance fund shall remain inviolate, except7that, upon application to the supreme court in a district where a8portion of the cemetery grounds is located, the court may make an order9permitting the principal or a part thereof to be used for the purpose of10current maintenance and preservation of the cemetery or otherwise.] In 11 addition, in any year, the governing board of a qualified corporation, 12 as defined below, may appropriate for expenditure solely for the mainte- 13 nance and preservation of the cemetery grounds, and treat as income for 14 all purposes, an amount of trust principal equal to the excess, if any, 15 of a percentage of the fair market value of the principal of the trust, 16 as of the last day of the cemetery's immediately preceding fiscal year, 17 as is prudent under the standard established by article five-A of this 18 chapter, the prudent management of institutional funds act over interest 19 and ordinary dividends received in such year; provided, however, that an 20 appropriation of an amount (the safe harbor amount) of trust principal 21 equal to the excess of up to four percent of the fair market value of 22 the principal of the trust, as of the last day of the cemetery's imme- 23 diately preceding fiscal year over interest and ordinary dividends 24 received in such year shall be deemed to be prudent in all events. A 25 "qualified corporation" means a cemetery corporation which adopts a 26 written investment policy setting forth guidelines on investments and 27 delegation of management and investment functions in accord with the 28 standards of article five-A of this chapter. If a cemetery corporation 29 seeks to appropriate any percentage of the principal of the permanent 30 maintenance fund in accordance with this subparagraph, the cemetery 31 corporation shall provide notice of such proposed appropriation and 32 provide a copy of its written investment policy by certified mail to the 33 cemetery board not less than sixty days in advance of such proposed 34 appropriation and shall disclose such appropriation as part of and in 35 addition to their annual reporting requirements as defined in section 36 fifteen hundred eight of this article, setting forth the amount of prin- 37 cipal to be appropriated for such expenditure and its effect on the 38 permanent maintenance fund. Such proposed appropriation shall become 39 effective sixty days after receipt of such notice, unless the proposed 40 appropriation exceeds the safe harbor amount or the written investment 41 policy is not provided or is not prepared in accordance with the stand- 42 ards of article five-A of this chapter, and the cemetery board within 43 such sixty-day period notifies the cemetery corporation that the board 44 objects to the proposed appropriation. Except to the extent that princi- 45 pal is utilized as the result of the foregoing, all principal of the 46 permanent maintenance fund shall remain inviolate, with the further 47 exception that, upon application to the supreme court in a district 48 where a portion of the cemetery grounds is located, the court may make 49 an order permitting the principal or a part thereof to be used for the 50 purpose of current maintenance and preservation of the cemetery or 51 otherwise. Such application may be made by the cemetery board on notice 52 to the corporation or by the corporation on notice to the cemetery 53 board. Unless the cemetery can clearly demonstrate that it lacks suffi- 54 cient future revenue to make repayment, any such allowance from the 55 permanent maintenance fund shall be in the form of a loan, and the courtA. 7651 3 1 shall determine the method for repayment of such a loan by the cemetery 2 to the fund. 3 § 2. Subparagraph 2 of paragraph (c) of section 1507 of the not-for- 4 profit corporation law, as amended by chapter 509 of the laws of 2014, 5 is amended to read as follows: 6 (2) The principal of such funds, whether kept in the perpetual care 7 fund or otherwise, and unless already so invested when received, shall 8 be invested within a reasonable time after receipt thereof, and kept 9 invested, in such securities as are permitted for the investment of 10 trust funds by sections 11-2.2 and 11-2.3 of the estates, powers and 11 trusts law. The income arising therefrom shall be used solely for the 12 perpetual care and maintenance of the lot or plots or parts thereof for 13 which such income has been provided. [In addition, the governing board14of the corporation may appropriate for expenditure solely for the15perpetual care and maintenance of the lot or plots or parts thereof for16which such income has been provided, a portion of the net appreciation17in the fair market value of the principal of the trust as is prudent18under the standard established by article five-A of this chapter, the19prudent management of institutional funds act. In the event that a ceme-20tery corporation seeks to appropriate any percentage of its net appreci-21ation in its perpetual care fund in accordance with this subparagraph,22the cemetery corporation shall provide notice of such appropriation to23the cemetery board not less than sixty days in advance of such proposed24appropriation and shall disclose such appropriation as part of and in25addition to their annual reporting requirements as defined in section26fifteen hundred eight of this article setting forth the amount of funds27appropriated for such expenditure and its effect on the perpetual care28funds. Such proposed appropriation shall become effective sixty days29after receipt of such notice, unless the cemetery board within such30sixty day period notifies the cemetery corporation that the board31objects to the proposed appropriation.] In addition, in any year, the 32 governing board of a qualified corporation, as defined below, may appro- 33 priate for expenditure solely for the maintenance and preservation of 34 the cemetery grounds, and treat as income for all purposes, an amount of 35 trust principal equal to the excess, if any, of a percentage of the fair 36 market value of the principal of the trust, as of the last day of the 37 cemetery's immediately preceding fiscal year, as is prudent under the 38 standard established by article five-A of this chapter, the prudent 39 management of institutional funds act over interest and ordinary divi- 40 dends received in such year; provided, however, that an appropriation of 41 an amount (the safe harbor amount) of trust principal equal to the 42 excess of up to four percent of the fair market value of the principal 43 of the trust, as of the last day of the cemetery's immediately preceding 44 fiscal year over interest and ordinary dividends received in such year 45 shall be deemed to be prudent in all events. A "qualified corporation" 46 means a cemetery corporation which adopts a written investment policy 47 setting forth guidelines on investments and delegation of management and 48 investment functions in accord with the standards of article five-A of 49 this chapter. If a cemetery corporation seeks to appropriate any 50 percentage of the principal of the perpetual care fund in accordance 51 with this subparagraph, the cemetery corporation shall provide notice of 52 such proposed appropriation and provide a copy of its written investment 53 policy by certified mail to the cemetery board not less than sixty days 54 in advance of such proposed appropriation and shall disclose such appro- 55 priation as part of and in addition to their annual reporting require- 56 ments as defined in section fifteen hundred eight of this article,A. 7651 4 1 setting forth the amount of principal to be appropriated for such 2 expenditure and its effect on the perpetual care fund. Such proposed 3 appropriation shall become effective sixty days after receipt of such 4 notice, unless the proposed appropriation exceeds the safe harbor amount 5 or the written investment policy is not provided or is not prepared in 6 accordance with the standards of article five-A of this chapter, and the 7 cemetery board within such sixty-day period notifies the cemetery corpo- 8 ration that the board objects to the proposed appropriation. 9 § 3. This act shall take effect immediately.