MISSISSIPPI LEGISLATURE

1997 Regular Session

To: Insurance

By: Representatives Stevens, Montgomery

AN ACT TO AMEND SECTION 75-63-3, MISSISSIPPI CODE OF 1972, TO INCREASE THE TRUST FUND DEPOSIT REQUIRED OF ENTITIES SELLING CERTAIN PRENEED FUNERAL SERVICE CONTRACTS; TO CREATE NEW CODE SECTION 75-63-6, MISSISSIPPI CODE OF 1972, TO REQUIRE THE LICENSING OF ENTITIES SELLING PRENEED AND PREARRANGEMENT FUNERAL SERVICE CONTRACTS; TO CREATE NEW CODE SECTION 75-63-16, MISSISSIPPI CODE OF 1972, TO PROVIDE THE REQUIREMENTS FOR PRENEED FUNERAL SERVICE CONTRACTS; TO AMEND SECTION 75-63-17, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT PRENEED, PREARRANGEMENT TRUSTS SHALL BE ADMINISTERED UNDER THE JURISDICTION OF THE STATE BOARD OF FUNERAL SERVICE; TO AMEND SECTION 75-63-18, MISSISSIPPI CODE OF 1972, TO REQUIRE ESTABLISHMENTS SELLING PRENEED, PREARRANGEMENT FUNERAL SERVICE CONTRACTS AND AGREEMENTS TO FILE CERTAIN ANNUAL REPORTS WITH THE STATE BOARD OF FUNERAL SERVICE; TO CREATE NEW CODE SECTION 75-63-20, MISSISSIPPI CODE OF 1972, TO REQUIRE THAT SELLERS OF PRENEED, PREARRANGEMENT FUNERAL SERVICE CONTRACTS SHALL PAY A CERTAIN FEE FOR EACH CONTRACT SOLD FOR DEPOSIT IN A SPECIAL RECOVERY FUND HELD BY THE STATE BOARD OF FUNERAL SERVICE; AND FOR RELATED PURPOSES. 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 75-63-3, Mississippi Code of 1972, is amended as follows:

75-63-3. (1) Any person, firm, corporation, association or partnership entering into any such contract as the seller or the party responsible for providing such services shall deposit an amount of money equal to not less than ninety percent (90%) of the value of such property or services as stated in the contract, into a trust fund established for that purpose. Such deposit shall be made not later than forty-five (45) days after the end of the month in which such contract is executed; except in the event that payment for the property and/or service shall be made by the consumer in installments, ninety percent (90%) of each installment payment shall be deposited to the trust within forty-five (45) days of the last day of the month within which such payment was made.

(2) Each initial deposit as to each contract into the trust fund shall be identified by the seller by furnishing the trustee with the name of the purchaser, a copy of the contract containing a statement of the value of such property or services and a description of the personal property and/or services to be furnished or provided by the seller thereunder. Nothing therein contained shall prohibit the trustee from commingling the deposits in any such trust fund for purposes of the management thereof and the investment of funds therein.

SECTION 2. The following section shall be codified as Section 75-63-6, Mississippi Code of 1972:

75-63-6. Every business, corporation, establishment and funeral home selling preneed, prearrangement funeral service contracts or agreements shall be licensed by application to the State Board of Funeral Service. The board may charge an initial and subsequent renewal license fee. Every such business shall renew its license on January 1 of each year.

SECTION 3. The following section shall be codified as Section 75-63-16, Mississippi Code of 1972:

75-63-16. No preneed, prearrangement funeral service contract or agreement shall be sold on a form or contract unless the form or contract has been preapproved by the State Board of Funeral Service. The prearrangement, preneed contract or form shall include:

(a) A heading in bold print that states whether the contract is revocable or irrevocable;

(b) If the contract is irrevocable, a clause which states that the contract may be transferred without penalty to another licensed trust or funeral home in this state;

(c) A clause which states that the purchaser, upon written request, may receive a full refund of all monies paid into a revocable contract at any time; and

(d) Any other provisions required by the board.

SECTION 4. Section 75-63-17, Mississippi Code of 1972, is amended as follows:

75-63-17. All trusts created pursuant to this chapter shall have corporate entities as trustees. The cemetery trust fund established under the provisions of this chapter shall be administered under the jurisdiction of the chancery court of the chancery court district wherein the seller is located or if the seller be located outside of the State of Mississippi then in the chancery court of the chancery court district wherein the purchaser resides. The chancery courts so having jurisdiction shall have full jurisdiction over the reports and accounting of trustees, amount of surety bond required, and investment of funds. The courts may waive the surety bond and control over investments in the case of trusts placed with an established bank or corporate trustee. The preneed, prearrangement trusts shall be administered under the jurisdiction of the State Board of Funeral Service. The board shall have full jurisdiction over the reports and accounting of trustees, investment of funds and surety bonds.

SECTION 5. Section 75-63-18, Mississippi Code of 1972, is amended as follows:

75-63-18. (1) Within thirty (30) days after the end of the calendar or the business' fiscal year, each cemetery merchandise business shall file with the clerk of the chancery court having jurisdiction over the administration of its merchandise trust fund an annual account, which account shall contain the following information:

(a) The name of the business, the date of incorporation, if incorporated, and the location of such business or businesses;

(b) The amounts of sales of all property and services for which payment has been made in full during the preceding calendar or fiscal year;

(c) The amounts paid into the merchandise trust fund, and the income earned therefrom during the preceding fiscal year; and

(d) The names and addresses of the owners of the business and, if incorporated, its officers and directors, and any change of control which has occurred during the past fiscal or calendar year.

(2) Within forty-five (45) days after the time by which the trustee's accounting and report is required to be filed with the cemetery merchandise business, as provided by Section 75-63-15, the business shall file a copy of such accounting and report with the clerk of the chancery court having jurisdiction thereof.

(3) As a condition to the transfer of any merchandise trust fund monies from one trust institution to another, the business for which such fund is maintained shall, not less than thirty (30) days prior to the time when such transfer is to occur, file with the chancery clerk a written notice of intent to transfer accompanied with a letter of intent to receive such trust fund monies from the trust institution to which such trust fund monies are to be transferred. Such fund monies shall be transferred directly from the existing trust institution to the receiving trust institution.

(4) Prior to any sale or transfer of any cemetery merchandise business or a controlling interest therein, an independent audit of the merchandise trust fund shall be performed at the expense of the seller and/or buyer or transferor and transferee and filed with the chancery clerk. Such audit shall be current within thirty (30) days of the proposed sale or transfer.

(5) Each chancery clerk shall maintain a properly indexed book in which there shall be kept, preserved and open for public inspection a copy of each record, report and notice required to be filed with the chancery clerk under the provisions of this chapter. For filing and indexing the records, reports and notices under this chapter, the chancery clerk shall be authorized to charge such fees as are provided in Section 25-7-9 for the recording and indexing of deeds.

(6) The clerk of the chancery court having jurisdiction shall, upon the failure to timely receive any of the records, reports or notices provided for under this chapter, immediately give notice by registered letter to the owner or owners of such business, or, if incorporated, its officers and directors at its or their last-known address, that such records, reports or notices have not been received. Failure of such persons to file such records, reports or notices within fifteen (15) days after such registered letter is mailed shall, in the absence of clear justification or excuse, constitute a misdemeanor and each owner and, if incorporated, its officers and directors, shall be subject to the penalties provided for in Section 75-63-23.

(7) Whenever it reasonably appears to the court upon complaint filed with the chancery court having jurisdiction thereof by any purchaser, or the family, legal representative or next of kin of any such purchaser, of any property or services contracted for under the provisions of this chapter that (a) such business is insolvent or about to become insolvent; or (b) that no merchandise trust fund has been established for such business or, if established, the trust fund does not contain such funds as are required to be contained therein, the court shall order a private audit and examination of any merchandise trust fund of such business and of all the books, records and papers employed in the transaction of such business.

In the event that such audit and examination shows that the business is insolvent or is about to become insolvent or that a sufficient trust fund is not established or being maintained for such business, the court shall exercise such jurisdiction and make and issue such orders and decrees as may be necessary to correct and enforce compliance with the provisions of this chapter and all such other orders and decrees as shall be just, equitable and in the public interest, including the appointment of receivers to continue or terminate the operation of such business.

(8) All the necessary expenses of any examination or audit performed or court proceedings conducted under the provisions of subsection (7) of this section shall be paid by the owner or owners of such business or, if incorporated, its officers and directors, and in the event that a sale of any such business is ordered by the court, the proceeds of such sale shall first be applied to the costs expended under the provisions of subsection (7) of this section.

(9) Within thirty (30) days after the end of the calendar year or the business fiscal year, every establishment selling preneed, prearrangement funeral service contracts and agreements shall file with the State Board of Funeral Service an annual report which shall contain the following information:

(a) The name of the business, the date of incorporation, if incorporated, and the location of such establishment.

(b) The amounts of all sales of preneed or prearrangement funeral service contracts or agreements during the preceding calendar or fiscal year. These amounts shall be identified individually by contract number and name of individual purchaser.

(c) The amounts paid into the preneed, prearrangements trust fund and the income earned during the preceding fiscal or calendar year.

(d) The names and addresses of the owners of the establishment selling such contracts and, if incorporated, its officers and directors, and any change of control that has occurred during the past fiscal or calendar year.

(10) The State Board of Funeral Service may have its auditors review at any time any and all records pertaining to the preneed, prearrangement funeral service contracts and trusts sold by any establishment doing business in this state. Such records shall be current and available to the auditors without prior notice.

SECTION 6. The following section shall be codified as Section 75-63-20, Mississippi Code of 1972:

75-63-20. The licensed seller of every funded preneed, prearrangement funeral service contract or agreement sold in this state shall pay a fee of One Dollar ($1.00) to the State Board of Funeral Service for each contract or agreement sold. This fee shall be paid at intervals as determined by the board and the proceeds of the fee shall be deposited into a special recovery fund held by the State Board of Funeral Service. The recovery fund shall be used only as deemed necessary by the board to protect consumer interests in the event of insolvency, bankruptcy or termination of business by a preneed, prearrangement trust or funeral home that does not have the ability to honor its contracts or agreements. The recovery fund shall be used only when no other reasonable alternative is available.

SECTION 7. This act shall take effect and be in force from and after July 1, 1997.