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Senate Engrossed House Bill |
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State of Arizona House of Representatives Fiftieth Legislature First Regular Session 2011
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HOUSE BILL 2160 |
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AN ACT
amending sections 32-1391.05 and 32-1391.06, Arizona Revised Statutes; relating to prearranged funeral agreements.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 32-1391.05, Arizona Revised Statutes, is amended to read:
32-1391.05. Prearranged funeral agreements funded by trusts; definition
A. All monies paid under a prearranged funeral agreement funded by trust, except as provided in subsection B, shall be deposited, within five business days after the receipt of the monies, in a prearranged funeral trust account with a financial institution doing business in this state. The monies shall be invested either in federally insured accounts, in which case the amounts so deposited shall not exceed the amount of the deposit insurance, or in direct obligations of the United States government. Federally insured accounts are defined as accounts insured by the federal deposit insurance corporation or the national credit union administration board. If invested in direct obligations of the United States government, the maturity dates of such obligations shall not exceed three years, unless rules adopted by the superintendent of financial institutions permit a longer period and not less than five per cent of the amounts so deposited shall at all times be deposited in federally insured accounts.
B. All monies paid under a fixed price prearranged funeral agreement funded by trust shall be deposited, within ten business days after the receipt of the monies, in a prearranged funeral trust account with a financial institution doing business in this state. In investing these monies the trustee shall exercise the judgment and care of a prudent investor under the prevailing circumstances.
B. C. Except as provided in this article:
1. All monies deposited in a prearranged funeral trust account and all accrued interest shall be held in the trust account for and remain the property of the beneficiary during the beneficiary's life and of the beneficiary's estate after the beneficiary's death.
2. A funeral establishment or another person shall not withdraw, transfer, remove, commingle, encumber or use as collateral any monies paid to the establishment under a prearranged funeral agreement funded by trust.
3. All monies deposited and accrued interest in a prearranged funeral trust account shall be exempt from attachment, garnishment, execution and claims of creditors, receivers and trustees of the funeral establishment other than the claims of the beneficiary or the beneficiary's estate.
4. All monies deposited and accrued interest in a prearranged funeral trust account up to a total of five thousand dollars shall be exempt from attachment, garnishment, execution and claims of creditors, receivers and trustees of the beneficiary other than the claims of the funeral establishment.
C. D. A funeral establishment may direct the financial institution in which the trust monies are deposited to transfer the trust account to another financial institution after providing each participant in the trust with the name and location of the institution and the new trust account number.
E. For the purposes of this section, "prudent investor" means a person who exercises the same care and expertise as a person of ordinary prudence, diligence, discretion and judgment would exercise in the management of the property of others, not in regard to speculation, but in regard to the permanent disposition of the funds considering the probable income as well as the probable safety of the capital to be invested.
Sec. 2. Section 32-1391.06, Arizona Revised Statutes, is amended to read:
32-1391.06. Service fees; prearranged funeral agreements funded by trust
A. A funeral establishment may charge an initial service fee when a person enters into a prearranged funeral agreement funded by trust of not to exceed fifteen seven per cent of the total amount agreed to be paid by the purchaser pursuant to the prearranged funeral agreement. If the amount to be paid by the purchaser is to be paid in installments, no more than one‑half of any payment made by the purchaser may be applied to the initial service fee. If the agreement is canceled prior to the completion of the agreement, any portion of the initial service fee that has not yet been paid under the agreement is no longer due and payable to the establishment. The portion of any payment by the purchaser that is to be applied to the initial service fee shall be paid to the funeral establishment and not to the trust account.
B. A funeral establishment may charge an annual service fee of not to exceed ten per cent of the interest that has accrued on the trust funds during the preceding calendar year. After each calendar year while a prearranged funeral agreement funded by trust is in effect a financial institution may release a portion of the trust funds equal to the annual service fee on receipt of a certificate of entitlement to an annual service fee from the funeral establishment.
C. The funeral establishment may direct the financial institution to pay, from time to time, from the monies in the trust account, any taxes that have accrued by reason of the income earned from funds deposited in the trust account. The payment may be made directly to the taxing authority or to the beneficiary of the trust account on the proper showing by the beneficiary that the beneficiary has paid the taxes. A financial institution may withdraw funds from the trust account, as previously agreed in writing, to pay reasonable and necessary charges for the administrative and investment management services provided by the financial institution.